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Let's take a closer look at a couple of loans that are great options for today's real estate market (FHA 203k Loans) and our SE MN location (USDA Rural Development Loans).  They both offer the buyer many advantages over Conventional Loans. 

FHA 203(k) Loans

The primary objective of this loan is for buyers to be able to use loan proceeds not only for the purchase of single family homes, but also for the rehabilitation and repair of these homes.  A perfect loan for those looking to purchase foreclosures, short sales, fixer-uppers, REO's, etc. that need some work.  Again, the borrower can get just one mortgage loan, at a long-term fixed (or adjustable) rate, to finance both the acquisition and the rehabilitation of the property. To provide funds for the rehabilitation, the mortgage amount is based on the projected value of the property with the work completed, taking into account the cost of the work. To be eligible, the property must be a one- to four-family dwelling that has been completed for at least one year. 

As far as what types of improvements are allowed with loan proceeds--luxury items and improvements are not eligible as a cost rehabilitation. However, the homeowner can use the 203(k) program to finance such items as painting, room additions, decks and other items even if the home does not need any other improvements. All health, safety and energy conservation items must be addressed prior to completing general home improvements.

USDA Rural Development Loans

This loan is used by borrowers to purchase a home they will personally occupy. The loan is a 30 year fixed rate mortgage and there is no loan limit as long as the borrowers meet income ratios. This no down payment loan can be used to purchase rural property in SE Minnesota both inside and outside the city limits. Closing costs and repairs can be included if the appraised value warrants. There is a 2% up front Funding Fee, but this loan does not require monthly mortgage insurance premiums. New Construction homes have a landscaping requirement. Contact your lender for income ratios and landscaping requirements.  Again, a great loan for purchasing a home in this part of Minnesota!