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If you find a home that fits the bill from a structure standpoint at the low end of your budget but it could use things like walls being dropped, kitchen update, bathroom updates, etc. Is there a different kind of mortgage you get at this point to buy the home and get extra money to accomplish such goals? In my head I would think it is as easy as saying we want to mortgage X dollars to do Y work. But that is me being simplistic, and I'm sure people do it all the time.
The FHA 203K Loan offers the opportunity for up to about $30,000 in specific repairs to be rolled in.
You have to get legitimate estimates from contractors, have the work type and $ amount approved, the loan carries through with a pre-construction appraisal, you close, and THEN the work is done, with Title disbursing funds to the contractor(s) once the appraiser confirms that the work is done.
Value is based upon post-remodel structure, and verified by appraiser and underwriter(s) as such.