Question by alc04@verizon.net: What type of loan?
We are looking to buy a multi-family home the bottom floor is completely finished however the second floor is still under construction and the owners ran out of money to complete it. We just received word that a conventional loan will not work because the second floor is not finished. What type of loan would we need to purchase the home?
Best answer:
Answer by Alex R
You will need a construction loan to complete the project and then switch this to a permanent loan once complete. If you have a home right now you can do a bridge loan also to complete the project. Let me know if I can help. Good luck!
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You need a 203K loan. This is a FHA Constr/Rehab loan which will allow you to finish the 2nd floor and have FHA inspections along the way. After you go to settlement to purchase the home, the rehab funds will be put into an escrow account and then withdrew as the repairs are completed in draws.
FHA203K loans offer lower interest rates than conventional construction loans.
The maximum loan amount would be 110% of the after-improved value, plus you can finance up to 6 months of your house payments.
The minimum amount for construction repairs is just $ 5,000.00 and the maximum amount of time to complete is 6 months. The construction/rehab must be on a primary residence – no investment properties allowed.
You could also do a FHA streamline 203K and finance up to $ 35,000.00 for construction/repairs before you move in.
Call your local FHA mortgage lender for more details.