Your 203K Loan Connection
What is an FHA 203K Loan?
Basically, it’s an FHA loan to purchase or refinance your home with additional funds for your home improvements. FHA which stands for Federal Housing Administration (FHA) is a mortgage insurance and is part of the Department of Housing and Urban Development (HUD). HUD or FHA do not make direct loans to consumers (homebuyers or homeowners) but FHA does insure loans that are funded by approved FHA lenders. FHA insures different types of home loans which one of them is the 203k that is used to rehab properties. The more popular version though is the FHA 203b which does not include funds for rehabilitation.
That is what makes an FHA 203k Loan different:
Most mortgage financing plans won’t provide funds to close unless the condition and value of the property are adequate enough to secure the loan. This means that the lender usually requires that improvements be made before a long-term mortgage is made. This is where the 203k loan comes into play because those improvements can now be made after the mortgage loan closes.
What Are The Types of 203K Rehab Mortgages?
There are two types of 203(k) rehabilitation Mortgages: The Standard 203(k) and the “Limited” also known as (AKA) a Streamline 203k
The Standard 203(k) Mortgage may be used for major remodeling, repairs and structural changes with a minimum repair cost of $5,000 and the use of a *203(k) Consultant is required.
The Limited 203(k) AKA Streamline may be used for cosmetic improvements, appliances and minor remodeling. The total rehabilitation cost must not exceed $35,000 and there is no minimum rehabilitation cost
*For more info about the 203K Consultant download the Free FHA 203K Guide.
What Are The Benefits of Using An FHA 203k Lender?
Many lenders offer FHA loans but the list of Lenders who offer FHA 203K Loans is short. Your best bet is to find and work with an FHA 203k Lender who is knowledgeable and experienced to guide you through the process. An FHA 203k lender can also do Regular FHA loans without renovations so working with a 203k Specialist will allow you to have additional FHA financing options without having to start the process over again.
How About FHA 203k Rates?
203k Rates in comparison to a regular FHA 203b loan without rehabilitation funds can be slightly higher but minimal. If you take into consideration the advantages of having one loan to purchase or refinance with additional funds included for home improvements with minimal down payment or equity it is quite attractive compared to any other alternative.
What Are 203k Loan Requirements?
203k Loan Requirements such as credit, income, down payment etc. are similar to the more popular standard FHA 203b loan that doesn’t provide funds for home improvements. Both have flexible guidelines with minimal down payment than most any other type of loan available. The difference between the two is that the FHA 203K will allow for the repairs, rehab or remodeling of your home to be included into the new loan while the Standard FHA 203B won’t.
Why You Might Be Here :
- The condition of your property won’t qualify for traditional financing
- The condition of your property just isn’t to your liking
- The lender you are in contact with does not offer or have experience with renovation 203k loans
- You just heard about this type of loan through maybe a Real Estate agent, another lender or someone you know
What Will You Do With the FHA 203K Loan
Has the idea of making your home your way perked your interest?
Talk to a 203K Specialist for YOUR area for more details or to get started.
Want to read more about FHA 203k’s? Then check out the 203k blog where you can find more general information on requirements, guidelines, credit scores, appraisals, rates, closing cost, down payment and more on the opportunities and options when using this type of financing.
Ask A 203K Lender
Do you have a specific question or scenario you would like answered directly by your renovation loan specialist? Then just go to your state page where your property is located for answers. Or, for a general question you can’t find the answer to, on the 203k Mortgage Lender site, then feel free to post it at the “Ask A 203K Lender” blog page.
Would you like to find out how you can be listed on the 203k Lender Directory?
Contact us for more information at :