Guide To FHA 203k Loans
FHA 203k Loans are called rehab mortgage loans. With a FHA 203k Loan, you can purchase a property that needs repairs and the mortgage lender will lend you the cost of the home plus the repair costs all in one mortgage loan. There are two different types of FHA 203k Loans. The FHA 203k Streamline Loan which limits the cost of repairs to $35,000 where you can do minor repairs such as kitchens, bathrooms, basement, attic, mechanical systems, windows, flooring siding, gutters, sofits, fascia, exterior siding, painting, appliances, and other non-structural repairs. The full standard FHA 203k Loan has no construction budget limit and you can do room additions, second story additions, and structural improvement along to what you can do with a FHA 203k Streamline mortgage loan. FHA 203k Loans gives a home buyer an opportunity to purchase a fixer upper and customize it the way you want.
FHA 203k Loans Is The Next Best Thing To A Custom Built Home
Unless you custom build your home, a home that is already built will most likely not satify your needs. You may find a home in a perfect neighborhood but the home may be too small. You may have found a home in a perfect lot but the home may be too small or need a lot of work. You may have found a perfect home but it only has two bedrooms but your family need three bedrooms. You may have found a home that is perfect but the home is old and in dire need of a major rehab but you do not have the money after the down payment. All of the above case scenarios can be solved by purchasing a home in need of rehab or major construction through HUD’s FHA 203k Loans. The FHA 203k Loan program is the next best thing to new construction. FHA 203k Loans enable you to purchase a home in major need of repairs and you can customize it the way you want which also include a complete gut rehab. With a FHA 203k Loan, you can turn that old tired home on a perfect lot into a brand new home that is customized to your family’s needs.
HUD’s FHA 203k Loan Program
The United States Department of Housing and Urban Development is the parent of the Federal Housing Administration , also known as FHA. FHA has created the FHA 203k Loans to promote homeownership in distressed areas and to help homeowners who were motivated to purchase distressed properties in need of rehabs and make them habitable again. By rehabbing vacant homes or homes in need of major repairs, it will also revitalize the neighborhoods and promote stability in neighborhoods and also promote homeownership. FHA 203k Loans is one of the most popular mortgage loan programs today that attract not just home buyers seeking home loan with bad credit but home buyers with stellar credit as well. These days is almost next to impossible to get a construction or rehab loan from banks and credit unions. After the real estate and mortgage meltdown of 2008, construction and rehab loans have become extinct and for those banks and lenders that offer then, the borrower needs stellar credit and reserves and extremely low debt to income ratios. Now, with HUD’s FHA 203k Loans, acquisition and rehab loans is extremely easy and streamlined and all you need is a 580 FICO credit score and 3.5% down payment on the after improved value of the home for the down payment.
Types Of FHA 203k Loans
There are two types of FHA 203k Loans available to home buyers and homeowners seeking FHA 203k Loans. The standard full FHA 203k Loan is for home buyers or homeowners who need extensive rehab to their homes such as room additions, second story additons, and structural work on their home. There is no cost or repair limit as long as the after improved value appraises out. Home buyers or homeowners needing more than $35,000 in repairs to their homes will need to apply for the full FHA 203k Loan.
FHA 203k Streamline Loans
The second type of FHA 203k Loan program is the FHA 203k Streamline loan which the maximum loan amount on the repair is capped at $35,000 which includes the reserves and costs of permits, consulting fees, and other fees. The FHA 203k Streamline loan is for minor repairs such as kitchens, bathrooms, basement remodeling, attic remodeling, windows, flooring, mechanicals, exterior siding, roofing, gutters, and other non-structural rehab. There is a 20% contingency reserve requirement in the event your estimated cost of construction exceeds the inital proposed construction budget and in the event of construction cost overruns. This reserve will be deducted from the $35,000 rehab financed amount and set in escrow. If you are needing to qualify for a FHA 203k Loan, contact me at email@example.com or call me at 262-716-8151. You can apply online by clicking on APPLY NOW FOR A FHA 203K LOAN and get pre-approved today for a FHA 203k Loan.
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