Dear Dr. Don, 

How do I qualify for a mortgage on a home that needs work? Do I need really good credit and a lot of money down?

Thanks, 

-Ron Rehab

Dear Ron, 

The Federal Housing Administration has a mortgage loan insurance program that should work for you. It is the Section 203(k) Rehab Mortgage Insurance program. Homebuyers can finance both the purchase price of a home and the cost of rehabilitating it. Homeowners may also use the program to refinance their current home and pay for rehabilitation costs.

The total value of the property can't exceed the FHA mortgage limit for the area. The Streamlined 203(k) program allows a homebuyer or homeowner to finance up to $35,000 to repair, improve or upgrade a home.

In general, FHA loan underwriting standards have lower down payment requirements than conventional mortgages. You can also qualify with lower credit scores. The FHA's website says, "All persons who can make the monthly mortgage payments are eligible to apply."

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