FHA Financing for “Fixer;” Save Cash For Repairs; Refi Later

We sometimes have buyers, with ample cash, use FHA financing to buy total “fixers” and then use their cash savings (from the smaller down payment) for improvements. Once their improvements are done, they come back to us and use their much higher appraised value to do a no-cost refinance into a conventional loan.

For example, we had a buyer with $200,000 in cash buy a “fixer” in downtown Walnut Creek for $600,000 with only 3.5% ($21,000) down. The buyers then used the $180,000 left over to completely remodel and expand the home. It re-appraised for $1 million, and they now have a fixed conventional rate of 3.5%.

Final note, once again: FHA financing does not require properties to be in better condition than conventional financing. FHA works to finance “fixers” as well as conventional.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 335646