| The Federal Housing Administration (FHA) helps | | | | scope of home improvement project. An appraisal is |
| consumers to obtain affordable home improvement | | | | performed to determine the value of the property both |
| loans by insuring loans made by private lenders to | | | | before and after renovation. If the borrower is |
| improve properties that meet certain requirements. | | | | considered a credit-worthy person, then the loan |
| In particular, HUD's 203(k) program can help a | | | | closes for an amount that will cover the cost of the |
| borrower to obtain a loan. The FHA-insured 203(k) | | | | improvement of the property, in addition to other |
| loan is provided through approved mortgage lenders | | | | closing costs. The amount of the loan will also include a |
| nationwide and is available to persons wanting to | | | | contingency reserve up to twenty percent of the total |
| improve or remodel a home. | | | | remodeling costs; the contingency reserve is used to |
| The down payment requirement for an owner is | | | | protect any extra work not included in the original |
| approximately 3% of the repair costs of the property. | | | | project. The funds are released to the contractor |
| The interest rate and discounts on the loan are | | | | during construction checks as the work is being |
| negotiable between the borrower and the lender. The | | | | completed. The borrower can decide to have up to six |
| government does not interfere with these negotiations. | | | | mortgage payments. To ensure completion of the |
| The list of participating lenders can be found at | | | | work, ten percent of each payment is reserved and is |
| The homebuyer, after selecting an FHA-approved | | | | paid after the lender determines that there will be no |
| lender, arranges for a detailed proposal showing the | | | | liens on the home. |