Q. I am a first-time buyer looking into buying a family member's home for $50,000. But the only way I would do it is if I'm able to borrow extra to finish the home. It is in the middle of being remodeled and needs cupboards, flooring and drywall. Are there loans available that will let me borrow enough to finish the home? I also would not have much of a down payment and thought about an FHA loan. Is that a good idea?

A. An FHA loan would be just right for your purchase and remodeling project. But Fannie Mae, one of the two big government-chartered companies that provide banks and mortgage companies with money for home loans, has a similar program you should also consider.

The Federal Housing Administration offers a 203(k) loan that provides funds for the purchase and rehabilitation of a home. You get one mortgage based on the value of the home when the work is complete. This is the major advantage of this type of loan. You get money for the work at the same low rate as the first mortgage, not at a higher second-mortgage rate.

You're going to have to get estimates and there will likely be a lot of paperwork, but this type of loan is worth the effort.

Regarding the down payment, the FHA currently requires only 3% down, which in your case would be $1,500, and that money can be a gift from friends, family or perhaps a community agency. It is a program worth looking into.

Fannie Mae's HomeStyle Renovation Mortgage works much the same way as the 203(k), but with fewer restrictions. One of the main differences in the programs is that a HomeStyle loan usually requires 5% down and it has to be your own money (no gifts or personal loans allowed).

A lender can help decide which is best for you. The FHA and Fannie Mae don't lend money directly to consumers. The FHA guarantees loans and Fannie Mae provides the money for loans through banks and mortgage companies. Virtually all of the participating lenders you find on the FHA will also work with Fannie Mae.