If you're buying a fixer upper that you'll live in, you might want to consider the FHA Section 203(k) loan program!

This program allows a buyer to finance their purchase and subsequent repairs into one loan.  The alternative is for a fixer-upper buyer to obtain a secondary or short-term loan to finance the repairs or improvements that they will make after settlement.

You can finance significantly more than the purchase price of the property in order to have cash on hand for repairs.  The funds for improvements are placed into an escrow account, and the buyer (now owner) can draw on them through the rehabilitation process to pay for the repairs and improvements.

There are a few basic guidelines that can quickly tell you whether this might work for your situation:

• This loan program is not for those purchasing investment properties.
• Single family homes, townhomes, all the way up to a fourplex are all acceptable properties.
• The improvements must meet HUD minimum property standards.
• The planned improvements must cost at least $5,000.
• The improvements must start within 30 days of settlement, cannot cease for 30 consecutive days, and must all be complete within six months of settlement.
• You, the buyer/borrower, can do the work yourself, though you can only be paid for the cost of materials.

Of note, the Streamline 203(k) might also be of interest -- it allows for up to an additional $35,000 to be financed for improvements prior to move-in.

I have had clients consider this program, who didn't end up buying a fixer upper.  Have you purchased a house in Harrisonburg (and surrounding) using this loan program?  Or do you know someone who has?  Please share!