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FHA 203(k) Loan: Renovation Loan

Have you stumbled across a home that you would like to buy, but needs a little (or a lot) of work? If this is the case, then our FHA 203(k) loan program may be the ideal option for you.

An FHA 203(k) loan enables you to finance not just the price of the home, but also the cost of needed and wanted fixes. With this kind of loan, you don’t have to scramble around to get the house repaired before closing.

When you apply for an FHA 203(k) loan, note that it follows standard FHA guidelines to determine eligibility. Additionally, you have six months to make the changes to the house.

Key Features of FHA 203(k) Loans

  • Use one loan to finance the purchase and home renovation
  • You have six months to remodel/repair your house
  • Standard FHA guidelines are used to determine eligibility

Requirements

Down Payment 3.5% of the final loan amount
Terms 30 years, fixed
Credit Score 640 minimum
Mortgage Insurance Yes
Maximum Loan Limit Yes, varies by county

Types of FHA 203(k) Loans

If you qualify for the FHA 203(k) loan program, you can go for a regular 203(k) loan or a streamlined 203(k) loan. With a regular 203(k) loan, the maximum amount you can borrow should be:

  • The current property value, including the repair
  • 110 percent of the property’s estimated value once improvements are complete

On the other hand, the maximum amount of money you can borrow on a streamlined 203(k) is the home’s purchase price plus $35,000.

Benefits Offered by FHA 203(k) Loans

You’ll enjoy the following benefits when you get an FHA 203(k) loan:

  • Savings – If you depend on your savings to fund and complete the repairs, you might find yourself running out of money quickly. An FHA 203(k) loan lets you hang on to your savings while the house undergoes repair or cosmetic changes.
  • Great Deals – Given that an FHA 203(k) loan is great for fixer-uppers, this loan will enable you to purchase a home at a reduced price.
  • Low Down Payment – You’ll be able to get a low down payment of 3.5 percent of the total home loan.
  • The FHA 203(k) loan gives you the opportunity to turn a house that looks a little rough around the edges to your ideal home. If you’re ready to apply for this loan program, contact us today.

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