Thursday, November 13, 2008

FHA Repair Escrows

If someone is buying a HUD home that has a repair escrow amount listed, and is using FHA financing, they can include the amount of the repair escrow in the FHA loan without having to get a rehab loan. Let's say the house is listed at $100,000 and the escrow amount is $2,000. They would be able to pay $100,000 for the house, but get the extra $2,000 included in the loan.

The amount listed for the repairs is not a set number. Before getting the loan, the buyer would need to get an estimate, and that number would be the amount that is included in the escrow account. It could be higher or lower than the amount estimated by HUD. Just about the only limitation on these repair escrow loans is that the buyer cannot add any other repairs into the escrow account. If HUD says the escrow is to "repair the heating system", then it can only be used to repair the heating system.

These repair escrow loans are available with HUD's $100 down program also.

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