Need To Update Your home? FHA 203K Loans

The Federal Housing Administration, FHA, now offers FHA 203K Loans for homeowners who need an aquisition and rehab mortgage loan at the same time.  The purpose of FHA 203K loans is to motivate mortgage lenders to originate and fund residential mortgage loans on homes that is in need of repairs and rehabilitate them to revitalize neighborhoods.  FHA 203K Loans are for home buyers who are interested in homes that are in need of repairs or homes that are damaged and need rehab.  It is a combined aquisition and construction loan with a 3.5% down payment for both the purchase and rehab loan amount.  FHA 203K Loans are also for existing homeowners who need to have repairs done to their homes.  They can do a FHA 203K refinance loan and pay off their existing mortgage and get a new mortgage with a construction escrow.  There are two separate types of 203K loans.  FHA 203K Streamline loans which is the aquisition cost and a maximum of $35,000 construction loan and the full FHA 203K Loan where there is no limit on the construction budget and is often used for room additions and structural changes of the existing home.

203K Loans: Two Types Of 203K Loans

The two different 203K Loan programs are the 203K Streamline and the Regular 203K Loan.  The full regular 203K Loan are for properties that exceed $35,000 in renovation costs and can include funding for structural repairs, room additions, foundation repairs, and major renovations like structural changes to the existing homes.  There is no construction limit to full 203K loans but the after completion value needs to appraise out.  For 203K Streamline, the maximum budget is $35,000 and that includes costs and reserves.  No structural changes can be made and no room additions are allowed on 203K streamline loans.  You can do roofing, windows, kitchens, bathrooms, flooring, basements, attics, flooring, appliances, and other repairs that does not change the structure of the home.

THE FOLLOWING REPAIRS APPLY TO FHA 203K LOAN PROGRAMS:

1.  Homes that are least one year old:  Homes that are fairly new and at least one year old can qualify for the 203K Loan program.  One to four units qualify as well as FHA approved condominium units.

2. Tear downs:  Tear downs qualify for the 203K loan program as long as it is the original foundation.  Total tear downs can be done as long as the new home is built on the existing foundation.

The Following Repairs Can Be Done With 203K Loans:

  • HVAC
  • Plumbing and Electrical
  • Roofing and siding
  • Energy conservation
  • Kitchen and Bathroom
  • New appliances
  • Decks, driveways, and patios
  • Room additions or second-story additions
  • Attic and basement
  • Site grading

FHA 203K Loan: How To Qualify?

You can qualify for both a FHA 203K purchase loan or a FHA 203K refinance loan.  If are a current homeowner and want to refinance your home with a FHA 203K loan, you can do so.  You need to have a minimum credit score of 640 FICO and need to go through the regular mortgage approval process where the mortgage lender will need you income, debt, liabilities, assets, credit history, and credit scores.  You need to get a scope of work and have a general contractor who has no relations to you.  Mortgage rates for FHA 203K loans are slightly higher than traditional FHA purchase or refinance loans and there are more costs and fees involved.  If you are interested in a FHA 203K loan in Illinois, Florida, California, Wisconsin, or Indiana, please contact me at 262-716-8151 or visit me at www.gustancho.com .

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

Comments are closed.