If you are considering the purchase of a property which an Appraiser has identified as requiring repairs, and which the seller is unwilling to fix prior to settlement, you typically only have two (2) financing options available, the Renovation/Construction Loan Program as listed below and the 203(k) Limited Repair Program
Renovation/Construction Loan Program
When the repair or renovation costs exceed the program limits listed above, a Conventional Construction/Renovation loan may be needed. Under this program, a home buyer could typically finance up to 80% of the total acquisition costs, which is defined as the purchase price PLUS the total cost to renovate the property. This type of financing is usually based on an Adjustable Rate program where the rate could change monthly based on changes to the Prime Rate. The borrower normally makes Interest Only payments during the renovation process. Once the property renovation /construction are completed the loan would be converted into Permanent financing based on programs and rates then available in the market.