Can I Qualify For FHA 203K Loan With Low Credit Scores?
FHA 203k Loans are an acquisition and construction loans all in one closing. Home buyers who are interested in buying a fixer upper, foreclosures, or homes that do not meet construction guidelines for residential loans would need to go with a FHA 203k Loan. Mortgage lenders will not lend on homes that are in need of repairs or are in poor condition or are not habitable. However, FHA 203k Loans allows homes buyers to purchase homes in need of either minor or major repairs and homes that are not habitable. FHA 203k Loans have tougher mortgage lending guidelines than standard regular FHA Loans due to the added layer of risk. Mortgage lenders consider home buyers buying fixer uppers as risky and may impose mortgage lender overlays. Mortgage lender overlays are additional guidelines in addition to the minimum FHA lending guidelines. Almost all FHA mortgage lenders have mortgage lender overlays on FHA 203k Loans due to the risk factors. Most mortgage lenders require a minimum credit score of 640 FICO. However, I can help FHA 203k mortgage loan borrowers qualify for FHA 203k Loan With Low Credit Scores. Depending on the loan amount, I have helped mortgage loan borrowers with credit scores as low as 580 FICO credit scores qualify for FHA 203k Loans.
About FHA 203k Loans
There are two types of FHA 203k Loans. The first type of FHA 203k Loan is the FHA 203k Loan Streamline which limits the rehab loan amount to $35,000. You can do any type of remodeling to your home with a FHA 203k Loan Streamline such as kitchen remodeling, bathroom remodeling, attic remodeling, new windows, new roofing, new flooring, new electric, new plumbing, new HVAC, new appliances, new millwork, new siding, new gutters, and any type of home improvements except for structural improvements and room additions. The second type of FHA 203k Loan is the full FHA 203k Loan where there is no maximum construction amount allowed. As long as the home will appraise out on an after improved value and the FHA loan is within the maximum FHA loan limit after improved,
Down Payment Required On FHA 203k Loans
One of the greatest perks with FHA 203k Loans is that all you need is a 3.5% down payment on a home purchase of the after improved value. For example, if you are purchasing a fixer upper for $100,000 and you need a construction loan for $100,000 where the after improved value of the property is $200,000, you will need 3.5% of the $200,000 after improved value plus closing costs. Most home buyers do not need to worry about the closing costs because closing costs can be covered by sellers concessions or lenders credit. Most FHA 203k mortgage loan borrowers just need to worry about the 3.5% down payment. The down payment on FHA loans can be 100% gifted by family members and/or relatives as long as a gift letter is signed by the donor stating that the gift is only a gift and not a loan and does not need to be paid back.
If you are a home buyer of a fixer upper, foreclosure, or a home that needs major renovations and need a FHA 203k Loan With Low Credit Scores, contact us at 262-716-8151 or email us at firstname.lastname@example.org. We are available 7 days a week, including holidays and weekends to answer your questions. Or you may APPLY NOW online at www.gustancho.com and by clicking APPLY NOW on the top right of our website.