We just recently bought our first home using an FHA home loan, but the house needs some repairs. It is a Duplex and one unit is rented to a Sec 8 Tenant.
We want to change the roof and the gutters, the gutters are rotten and they need to be replaced since water is leaking through the walls affecting my tenant unit.
Also my unit does not have any heater system whatsoever and I need to install central heating.
So I need to find a lender near my area to make these improvements.
Can you tell me where I can go and what kind of a loan to ask for?
I would like to congratulate you on the purchase of your new home. And you bought a 2 unit at that!
Also, thanks for stopping by my site and asking your questions.
I only wish we could have talked before you purchased the home since you could have used a FHA 203(k) loan. This loan allows you to buy the house and make the repairs using the financing guaranteed by FHA.
However, the house had to pass an FHA inspection so it cannot be in too bad of shape. I'm surprised the FHA inspector did not catch the roof leak you speak of.
What you need to do now is locate a FHA Title 1 lender. These are harder to find. Also they are not too willing to work with people since it takes so much paperwork to do these smaller loans.
So you will need to be very persistent when it comes to finding and working with the lender who will loan money for just the repairs.
The FHA Title 1 loan works like this. You will borrow the money to do the repairs after you get the estimates together. If you are planning on doing the work yourself, they will put you through a few more hoops.
If you will be using a contractor, they will give you a estimate. I suggest you get at least 3 estimates to be sure you are not paying too much.
You can borrow up to $12,000 per unit. They will look at the equity in the home. Loans over $7,500 will need to be secured by a mortgage or deed of trust. That may be where your problem comes in.
In most cases FHA buyers only put 3.5% down so you have very little equity.
I did a search of Title 1 lenders in your city and found 13 of them. Here's a link you can use to see the list of FHA Title 1 lenders in Oakland California. Give them a call and see if you can get them to work with you.
I hope you find this helpful.
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