Most mortgage loan programs require a property to be in sound condition with no structural defects or required repairs. Not the FHA 203k rehab loan. It’s made for homes needing anything from a light spruce up to major repairs, improvements or new additions.
Are you interested in buying a fixer-upper home, but don’t have the cash to remodel it? Maybe you have the money for remodeling and you’ve found a house you love, but your lender won’t allow you to buy it because the house isn’t considered habitable without toilets.
“No toilets” doesn’t scare you but it does scare traditional lenders. Never fear the FHA 203K Rehab Loan is here and ready to get to work! There are always properties on the market that weren’t maintained by the owners, were treated poorly by renters or were deliberately trashed by formers owners before they lost their home to foreclosure.
Combine Purchase and Improvements – The 203k loan covers your purchase price and the cost of improvements. The proposed work must be supported by a “value upon completion” appraisal. You can save by financing renovation costs into the original mortgage rather than racking up credit card bills or dipping into reserve savings later.
Create the Perfect House – If you’re having trouble finding the right house in the right location, the 203k is the perfect solution. Just take a well located home, add your own personalization and improvements, and make it “just right.”
Determine Your Eligibility – As with the regular FHA program, credit requirements vary yet can be more flexible than with conventional financing. There are no income limits or first time buyer status requirements.
Minimize Out of Pocket Costs – The 203k can be obtained with as little as a 3.5% down payment. Gifts can be used, sellers can contribute toward closing or costs can be rolled into the loan amount right along with your pre-paid taxes and insurance.
Applying for the 203k requires more work than other loans, but given all the advantages, it is a great option to consider.
If you want to learn more download the FHA 203k Fact Sheet.