The Real Deal Miami

FHA lending program allows investors to tap into run-down homes

January 18, 2013 02:15PM

A federally backed lending program may help buyers tap into run-down homes for a quick return on investment, the New York Times reported. The Federal Housing Administration’s 203(k) program allows buyers to incorporate the cost of necessary repairs into their mortgage, on both single-family homes and multifamily homes with up to four units. The loan—which requires a low down-payment of 3.5 percent — covers purchase and repair costs and is determined using the property’s post-restoration value. Originations of 203(k) loans have increased to more than 25,000 in 2012, up from 3,400 in 2007. This opens the door for investors to quickly turn around a home for a profit, experts say. [more]