Buying a house that needs updating

The lender will need copies of your plans and specifications as well as your renovation contract.Since you can put down as little as 5%, the most you can borrow on the home is 95% of the lesser of: Renovation costs include not just labor and materials but also property inspection, architectural and engineering, and permit and licensing fees, plus an optional 10% contingency reserve.

But a couple of rules governing these loans have been relaxed to: RATE SEARCH: Find a great mortgage rate.

The limited 203(k) mortgage is for minor remodeling projects that don't require structural modifications such as adding rooms.

Formerly called the regular or full 203(k) and the streamline 203(k), they're now called the standard 203(k) and the limited 203(k).

The standard 203(k) loan is for almost any kind of repair or improvement — even the reconstruction of a demolished home, as long as the original foundation remains.

You can borrow more than the home is worth, as long as the repairs will increase its appraised value.

The most you can borrow is 110% of what an appraiser estimates it will be worth after renovations, or the cost of the home plus the estimated renovation cost, whichever is less, minus your down payment. The maximum also must fall below the FHA mortgage limit for the area — 1,050 for single-family homes in most parts of the country and up to 5,500 in high-cost areas.

You can drop private mortgage insurance on a conventional loan when equity in the home reaches 20%.

This type of financing requires a down payment of just 5% if you're buying a single-family home with a fixed-rate mortgage.

You can use one of these loans to repair or replace: It can also be used to remodel your kitchen and get new appliances, to finish your basement, to paint your home and to add insulation and weather-stripping, among many other possibilities.

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