An FHA 203K rehab loan allows you to borrow money for both the purchase of a home and home improvements, all in a single loan. FHA’s mission is to promote home ownership, properties in less-than-perfect condition are a good way to do.
FHA 203K rehab loans are especially attractive to…
- Borrowers who are buying a new home that is a “fixer upper.”
- Buyers who want to finance the cost of purchasing a home and needed improvements into a single loan.
- Those who might not otherwise qualify for a conventional construction loan.
Combining the home purchase and repair costs into one loan
FHA 203K loans are a great way for home buyers to purchase a home needing some repairs using a single loan.
Low down payment
A 203K mortgage follows general FHA loan requirements.
Types of improvements
FHA 203K offers two options: Standard and Limited. For smaller improvements of up to $36,000, look for the Limited 203K. Larger renovations refer to the Standard 203K.
Borrowers qualify for 203K rehab loans, which are the same as a general FHA transaction.
FHA 203(K) Rehab Loan
Get an idea of what your monthly mortgage payment may be, including costs associated with your mortgage such as property taxes, homeowners insurance, and Private Mortgage Insurance (PMI), if applicable.
Recalculate your new house payment based on loan amounts, interest rates, and other factors, to see if refinancing your mortgage is a smart financial move.
Calculate how much house you can afford. Get an estimate for a mortgage amount that may fit comfortably within your budget.
Frequently Asked Questions
Yes. The Limited 203K option allows for repairs up to $36,000. Typically cosmetic type repair are required. Standard 203K is for larger repair projects with more flexibility for repairs allowed.
In addition to FHA loan requirements, 203K rehab paperwork is required which may include and is not limited to contractor bids, 203 Consultant bids, permits, engineer reports, termite reports etc.
As with any mortgage, you want to be sure you pick a lender who understands not only the FHA’s requirements in general, but also the 203K loan requirements in particular. FOA has a dedicated experienced Renovations Team to help facilitate all rehabilitation loans.
The down payment is calculated n the cost of the total project. This includes the purchase price of the home plus the cost of the repairs that will be financed through the loan.
The rehab work on your home must be completed within a six-month period. Funds are set aside and disbursed with Draw Requests submitted to FOA renovations team. Finding a contractor you trust who will meet your needs and 203K requirements will make the rehabilitation process simpler.
FHA loan rates vary depending on several factors, such as your own credit history, the current state of mortgage interest rates, and whether you go with a fixed or adjustable rate option.
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