Boston Triple-Deckers: A Suggestion

Today’s NYTimes.com features an article about that particularly New England home, the triple-decker. These are lovely homes from the 1890’s built to house the influx of immigrants from Europe. These homes were a wonderful alternative to the tenement housing of the time. In the ensuing years, triple-deckers have come to describe the character of a neighborhood, whether in Boston or New Bedford. Dennis Lehane, author of “Mystic” featured these homes much like characters in his book (and in the subsequent film directed by Clint Eastwood).

My wife lived in one for a time when she lived in the Boston area and has fond memories of her time living in a triple-decker.

Today’s NYTimes reports of the foreclosure blight affecting this beloved New England icon.

I have a suggestion for any of you first time buyer folks living in a town with triple-deckers: go out and buy your first home—a triple-decker—and use the FHA 203k Rehabilitation Loan to do so. NYTimes reports there are many foreclosures selling far below market. This is the ideal opportunity to purchase a first home at a considerable discount and obtain the money necessary to renovate that home to your specifications. As the article points out, triple-deckers have long been the domain of first time buyers looking for an affordable option for homeownership: the rental of the other two apartments helped homeowners offset their monthly mortgage payments.

The FHA 203k Loan is a program wherein the Lender provides you with the money to purchase the home (acquisition) combined with the money to improve the home (construction) in one closing and with a single 30year fixed mortgage payment. I am an expert in this program having originated many such loans in Harlem and Bedford-Stuyvesant in the early-mid 1990’s under President Clinton’s initiative to rehabilitate inner cities using the FHA 203k program. We encountered a similar experience then in those communities that New Englanders now face with these triple-deckers: historic brownstones, multiple families of 3 and 4 family properties, were in need of serious rehabilitation and presented first time buyers with an excellent opportunity.

With this program, you make your 3.5% downpayment off the purchase price of the home. You present to the Lender your plans for renovating the property. These plans are prepared in consultation with your contractor and an independent FHA Certified Consultant. The Lender uses your proposed improvements both to appraise the house at “future value” after improvements and to make the final loan decision. Minimum repairs are $5,000 with most Lenders. A feature of the program allows you to include up to 6 months’ worth of mortgage payments in the loan so you don’t have to worry about paying rent on your current apartment and a mortgage on your new home while your contractor completes the renovations.

The Seller of the home receives her money (your 3.5% downpayment and the Lender’s portion of the acquisition loan) at the closing table and you receive title. Your repair money is placed in an escrow account upon closing of title: your contractor receives the go-ahead to begin work with the renovation money available in up to 5 “draws” or payouts depending on the amount of construction/renovation.

FHA Loans are only available for Owner-Occupants; Investors are not permitted. You don’t have to be a first time buyer to qualify, either.

FHA Loans require you qualify based on your income, assets, and credit, although the criteria are much more flexible with most FHA Lenders than with Conventional loan programs. There are no income limitations; the program is available to all American Citizens, Permanent Resident Aliens, and even Aliens working with Authorization from the U.S. Government. FHA is an insurance program so you’ll be paying two insurance premiums (one Upfront at closing, financed in the loan for thirty years, the other built into your monthly payment), and you must pay those premiums regardless of the size of your downpayment (even if it’s more than 20% down).

You can find an FHA Lender in your area at the FHA Website along with more information on the FHA program. If you live in a New England town or city where there are triple-decker homes in need of your love and attention, and you want to get a great deal on your first home, I strongly recommend you consider this financing option to help you make that dream come true. You’ll be doing something good for you, and for the historic quality of New England, too.

Hope that helps!