FHA Question

[Anonymous]

Hello!  I am in the market for my first home and there are a lot of fixer-uppers/foreclosures in my area (phoenix). I have money for the down payment, fees, and closing costs, but I don't want to clean out my saving to make home improvements upfront if I buy one of these homes. I am approved up to 300k. The houses I am looking at are in the 120k-150k range. If the loan is 135k + tax + closing costs and everything else, is it possible to ask for 160k to make those renovations? My loan is an FHA. If not, I am going to look for a move-in ready house in the 200k-300k range. Thanks!

[ShanetheMortgageMan]

You may approach this by offering $160k, and have the seller make all repairs prior to closing (which isn't too likely) or you can buy the home with FHA's 203k rehab program, which would allow you to finance the purchase price + the cost of improvements, minus a 3.5% down payment on the total figure.  Very detailed information about the program can be found at http://www.hud.gov/offices/hsg/sfh/203k/203kabou.cfm but if you have more questions about it feel free to post them in your thread here.  The seller can pay your closing costs on a 203k loan as well (up to 6% of the sales price), so if you negotiate the contract that way you would just need to bring in the 3.5% down payment at closing.