There are some loan options for fixer-upper homes that allow the borrower to wrap the cost of the renovations into the loan. Here are a few:
FHA Loans – FHA which offers many different types of loans geared toward first home buyers and owner-occupants. They have programs that only require 3.5% down. Be aware, however, that loans with less than a 20% down payment will permanently carry mortgage insurance and their rate is higher than other lenders. Their 203(k) loan program even allows borrowers to wrap renovation costs into their mortgage when they buy a fixer-upper.
HomePath Loans – This is a labeling for loans on all Fannie Mae-owned foreclosure properties. They offer low down payment requirements, no required appraisals and they do not charge mortgage insurance. These loans are available both to owner occupied purchases and investors. The HomePath Renovation Mortgage is available to borrowers who plan on renovating the house.
We actually have a great blog post on this if you want to to try some tricks that will help you in buying a house in need of repairs ! I will give you an overview of the post In reality there may be some difficulties when it comes to financing on these kinds of properties.
If you have never considered buying a home in need of repairs, you may be wondering why anyone would suggest that it could be a good investment.
Properties in need of repair, also referred to as “fixer-uppers” or “handyman specials” are a great way to get an enormous price break. For some buyers, this may be a way to make home ownership possible if the buyer is willing to spend a little on renovations and put in a little elbow grease of their own. Of course, not every fixer-upper is the same. You need to know the difference between something in need of repairs and something so dilapidated that no amount of repair work can make the eventual value of the property exceed the expense of renovation. Find out more here
Best of luck, I hope we can help :–)