What Are FHA 203k Loans?
FHA has a special program call FHA 203k Loans which are an acquisition and construction loan program all in one mortgage loan and one closing for home buyers and homeowners needing to purchase a home or refinancing their current home with a construction loan to do rehab on their property. With a FHA 203k Loan, a home buyer can purchase a fixer upper or a foreclosed property that is not habitable and cannot qualify for standard conventional or other mortgage loan program. The beauty with a FHA 203k Loan is that you can pretty much do anything to your home, whether it is basic kitchen and bathroom remodeling or a complete gut rehab or even a tear down and building a new home on its current foundation. There are two types of FHA 203k Loans: The FHA 203k Loan Streamline Rehab Loan and the Standard Full FHA 203k Loan Program.
FHA 203k Loan Requirements: FHA 203k Streamline
The FHA 203k Streamline Rehab Loan is limited to a construction budget of $35,000. You can do any type of remodeling with the FHA 203k Streamline Rehab Loan such as kitchen remodeling, bathroom remodeling, basement remodeling, attic remodeling, millwork, painting, windows, siding, gutters, HVAC, appliances, and other types of work. However, you cannot do any structural changes to your existing home nor can you do any room additions or add new square footage to your existing house. FHA 203k Loan Requirements mandate that luxury types of rehabs such as installations of new swimming pools, installing a lake and/or pond, tennis courts, or other types of luxury items cannot be done with FHA 203k Loans. FHA 203k Loans are limited to improvements of the home and not luxury improvements such as outdoor kitchens or other luxury amenities. These FHA 203k Loan Requirements are both for FHA 203k Streamline Rehab Loans and the Full Standard FHA 203k Loans.
FHA 203k Loan Requirements: Full Standard FHA 203k Rehab Loans
There is no construction budget with the full standard FHA 203k Rehab Loan Program as long as the after improved value appraises after the improvement and the home loan meets the maximum FHA Loan Limit. For example, if the maximum FHA Loan Limit is $271,500 and if a home buyer is buying a fixer upper for $100,000 and needs $150,000 to do a complete gut rehab remodeling project on this subject property, the home buyer can qualify for a Full Standard FHA 203k Loan for $250,000 as long as the after improved value of the home is appraised at $250,000 and since the $250,000 is below the maximum FHA Loan Limit of $271,500. With the full standard FHA 203k Loan Program, you can do structural changes to your home, you can do second story additions, you can add on to your existing home, you can do a complete gut rehab, and you can even do a complete tear down and rebuild on its existing foundation. One of the greatest benefits for FHA 203k Loans is that the home buyer only needs 3.5% down payment of the after improved value to qualify for a FHA 203k Loan, both FHA 203k Streamline as well as the full standard FHA 203k Loan.
Minimum FHA 203k Loan Requirements
FHA 203k Loan Requirements fall within FHA mortgage lending guidelines. The mortgage loan borrower needs at least a 580 FICO credit score, needs a 3.5% down payment on the after improved value, and must meet all other FHA Mortgage Lending Guidelines . We do not have any mortgage lender overlays , so as long as you meet the minimum FHA Guidelines and get an approve/eligible per Automated Underwriting System, we can get your FHA 203k Loan approved, closed, and funded. Please contact me at 262-716-8151 or email us at firstname.lastname@example.org if you are interest in getting a FHA 203k Loan. We are FHA 203k Loan Experts.