Is it true that a mortgage company wont give you a loan on a house that need rehab?

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currently 20 yrs old living with parents, want to move out but cant afford mortgage over 600/month. The only houses cheap enough in my area(frederick, md) all need to be rehabed. Can do windows, doors, finish carpentry,drywall, plumbing and insulation my father would help me with any electrical work. But a coworker has told me that its impossible to get a loan on a house that needs to be gutted, and have a lot of things replaced. Is this true? The one im currently looking at is 88,000 1840’s colonial i have 5% for a down payment. My credit score is 690.

4 Comments
  1. Reply
    Sendy
    April 29, 2011 at 11:37 pm

    I’m in the same boat as you. There is a fha 203k loan but i’m not sure if you’re allowed to do most the work your self.

    Watch my question see if anyone posts

    http://answers.yahoo.com/question/index;_ylt=At3oQiSbYei3Bkh7.dgbjxjsy6IX;_ylv=3?qid=20080215030346AAT5WIp

  2. Reply
    d s
    April 30, 2011 at 12:12 am

    Just all depends if you are trying to get extra money on top of the loan to fix it then no they wont but its possible to get a loan on a house and not tell them you want to gut it and then go in and fix it up after you have moved in as long as the house is not to run down they normally must have operational heat windows must all be there water must work they have to be some what livable Just my 2 cents from past experiances

  3. Reply
    bob W
    April 30, 2011 at 12:43 am

    offer a 5 year lease 2 purchase then resell it to someone collect 5k down as a rent to own. have them fix it up then find any reason to evict them. you not only have a fixed up house but 5k to boot. Its all win-win

  4. Reply
    Dizzy_Lizzy
    April 30, 2011 at 12:50 am

    An $ 88,000 mortgage at 6.5%, with $ 4,400 down is roughly $ 660/mo inc. taxes and insurance. That’s already over your max.

    The big question though is can you manage to pay a mortgage at the absolute top of your range AND still have the cash available to buy all of the items you’ll need to fix the house, including unexpected repairs? When I bought a home a few months ago, I spent about 20% less than I was preapproved for, and it’s still going to take a couple of years for us to have the cash – without emptying our savings – to do all of our intended improvements (replace windows & exterior doors, remodel bathrooms, replace plumbing stack, upgrade electrical box). And that’s assuming that we don’t have some big expensive thing break on us.

    You talk about having your dad help you, but have you researched what work in your area is required to be done by a licensed professional? Where I live, changes to the plumbing & electrical systems must be performed by a licensed contractor. If you fail to use one when it’s required, you could find yourself in quite a mess when you try to sell if your area requires building code inspections.

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