203k Rehab Mortgage Mississippi Mortgage Guidelines


This Blog On 203k Rehab Mortgage Mississippi Mortgage Guidelines Was UPDATED And PUBLISHED On February 13th, 2020

What are the 203k Rehab Mortgage Mississippi Mortgage Guidelines

Housing prices in Mississippi have been rising year after year since 2012.

  • Many homeowners in Mississippi own homes in dire repair due to not having flood insurance
  • Many homes in the state of Mississippi got damaged due to floods and hurricanes in the past 10 years
  • Now homeowners in Mississippi can qualify for HUD’s 203k Loans to do repairs
  • Mississippi home buyers can also purchase fixer-uppers and customize it with our 203k Loan Program at Gustan Cho Associates

In this article, we will discuss and cover using 203k loans to purchase fixer-uppers.

Using 203k Loans To Purchase Fixer-Uppers

203k loans are one of the most popular mortgage loan programs out today.

  • The United States Department Of Housing and Urban Development, or HUD, is the parent of the Federal Housing Administration, or FHA
  • FHA has the 203k mortgages 
  • This loan program is an acquisition and rehab mortgage loan all combined in one loan and one closing

Here is a loan scenario illustrating using an FHA 203k Renovation Loans:

For example, here is a case scenario:

  • Say a home buyer wants to purchase a foreclosure
  • Property is currently not habitable
  • Sellers want $100,000
  • It takes $100,000 to get it rehabbed and habitable
  • So, the home buyer will need a total of $200,000 to have the acquisition and construction for this home purchase project

Most lenders will not lend on a property that is not in good condition and habitable.

Cases Where Home Buyers Can Benefit Using FHA 203k Loans

What are the cases in which buyers can take advantage of FHA 203k loans

This is when a home buyer can utilize the 203k Loan Program to purchase the home:

  • Have the acquisition and rehabilitation funding for the repairs all in one mortgage loan with very little money down payment
  • Many home buyers, especially first time home buyers, do not have the cash to do the rehab and construction funding
  • Second mortgages are very difficult to secure these
  • Unless there is a lot of equity in the home being rehabbed
  • The 203k Rehab Mortgage is the answer to many homebuyers who have very little cash to put down on a home purchase
  • The rehab funding is out of the question to make their custom dream home come true
  • 203k Loans may be the answer to a home buyer who wants to purchase a fixer-upper
  • Turn that fixer-upper into their dream homemaking into a reality
  • 203k Rehab Mortgage has been specifically created and launched for homebuyers who want to get financing for the cost of home renovations into an acquisition and construction loan

This can be done with a very low down payment and making it affordable.

How Do I Qualify For FHA 203k Rehab Mortgage Loans?

All borrowers need to qualify for FHA Loan Requirements.

Need to meet 203k Rehab Mortgage FHA Lending Guidelines:

203k Rehab Mortgage Loans are FHA Loans so there are two parts in the FHA 203k Rehab Mortgage Qualification Requirements:

  • The borrower needs to meet all FHA Mortgage Lending Guidelines
  • FHA 203k Rehab Loans are considered higher risk files
  • Most lenders do have lender overlays
  • Have higher mortgage rates due to being considered higher risk
  • Do not allow for Manual Underwriting
  • Lenders normally have overlays
  • Most Lenders will require a 640 FICO

The Team at Gustan Cho Associates can qualify borrowers for FHA 203k Loans with lower credit scores.

How Does The FHA 203k Rehab Loans Work?

How Does The FHA 203k Rehab Loans Work?

The way 203k Rehab Mortgage Loans work is as follows:

  • 203k Rehab Mortgage Loan Programs will require the borrower to put a 3.5% down payment on the acquisition and construction based on the after improved value of the property
  • Homeowners refinancing their homes with a 203k Rehab Mortgage can go up to 110% of the after improved value of the property based on the after improved value on the appraisal
  • Funding for the 203k Rehab Mortgage consists of the home purchase price, improvements needed to be made on the home

Two types of FHA 203k Rehab Mortgage:

  • Streamline which limits construction budget to $35,000
  • Standard Full Standard FHA 203k Rehab Mortgage Loan Program which there is no limit on the construction budget
  • This holds true as long as the property appraises out with the after value appraisal
  • FHA Loan does not go over the maximum FHA Loan Limit cap

Benefits Of 203k Mortgage

There are many benefits to utilizing the 203k Rehab Mortgage Program.

  • Opportunity to purchase a fixer-upper where buyers could not have been able to and customize their fixer-upper into a dream custom home
  • The ability not just to remodel but also to do room addition and add square footage to home purchase where it will add major value to their home
  • Basement remodeling, attic remodeling, and room additions are allowed with 203k Rehab Mortgage Loan Programs
  • Renovations on fixer upper home purchases can be quite expensive
  • HUD 203k Loans will give buyers the opportunity to choose the contractor of their choice and choose their own materials and decor on the rehab of their home
  • Almost as good as having your home build

If you are interested in getting more information on Rehab Mortgage Loans, please contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. We are available 7 days a week, evenings, weekends, and holidays. You can also email us at gcho@gustancho.com.

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