When it comes to FHA loans, prospective home buyers don't have to limit their options to just sparkling new places.
You can use an FHA loan to make repairs on that fixer-upper you've had an eye on. With a Federal Housing Authority loan, home buyers can simply factor in the cost of the renovations and repairs into the overall loan.
The FHA's Section 203(k) program was created to handle these "fixer-upper" situations. Just remember that the amount of the loan needs to be pinned down before construction work begins, so make sure to get detailed and reliable cost estimates for your repairs.
The minimum repair amount is $5,000.
Also, remember that the 203(k) program requires all repair work be conducted by a qualified contractor. People qualified to do the work themselves can save money by doing so, but they're only paid for materials if they're doing the repair work themselves.
Typically, you have six months after buying the house to finish the renovation work. Inspectors OK'd by the federal government have to give you the go-ahead before the repair money is released. And those looking to simply "flip" a home need not apply: You won't qualify for the loan.