Thinking of buying a home that needs remodeling? Want to know more about federally insured loans that can help you?

We asked the Department of Housing and Urban Development to tell us about special renovation loans.

We know: All About Home Renovation Loans

What do I do when I want to renovate a home before buying it?

When a homebuyer wants to purchase a house in need of repair, the homebuyer usually has to obtain financing first to purchase the dwelling; additional financing to do the rehabilitation construction; and a permanent mortgage when the work is completed to pay off the interim loans with a permanent mortgage.

The federal government’s 203 (k) program allows you to get just one mortgage loan, at a long-term fixed (or adjustable) rate, to finance both the acquisition and the rehabilitation of the property.

What properties are eligible?

To be eligible, the property must be a one- to four-family dwelling that has been completed for at least one year.

Homes that have been demolished, or will be razed as part of the rehabilitation work, are eligible provided some of the existing foundation system remains in place.

Are condominiums eligible?

Yes, under some circumstances.

How much must I spend on improvements to be eligible for the program?

At least $5,000.

What are examples of eligible improvements?

Improvements that will make you eligible for the 203 (k) loan program include:

Structural alterations and reconstruction, such as chimney repair, skylights, repair of termite damage and finishing attics or basements
Changes to modernize or improve how things work, such as update bathrooms and kitchens and installing permanent appliances
Eliminating health and safety hazards
Improving aesthetic appeal and obsolete features, such as adding new siding, a second story, or carport
Plumbing improvements
Well or septic tank system installation
Roofing, flooring improvements or replacement
Energy conservation improvements
Major landscape work
Improvements to help the disabled

Ask the mortgage lenders you are considering if they participate in this HUD 203 (k) loan program for home renovation and remodeling.