A mortgage that covers the costs of rehabilitating (repairing or Improving) a property; some rehabilitation mortgages - like the FHAs 203(k) - allow a borrower to roll the costs of rehabilitation and home purchase into one mortgage loan.

A Title-1 Loan, is considered to be a property rehabilitation loan.

A.K.A a rehab loan, allows homebuyer wants to purchase a house in need of repair or modernization or refinance an existing dwelling.

Fannie Mae also has programs such as the Homestyle and Homestyle Renovation which will allow borrowers to do construction on their homes.

These programs are available through a variety of different lenders, each has its own guidelines. Some lenders will lend you 65% of the Future Value of the home, that money can be used for the purchase and rehabilitation construction.

Often times money can be held in an escrow account and disbursed to contractors as the work is done.

 

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