203k Program
FHA 203k Home mortgage programs are issued by federally qualified lenders and insured by the U.S. Federal Housing Authority, a division of the U.S. Department of Housing and Urban Development.
FHA 203k Loans are designed for people that want to buy a “fixer-upper” to turn into their dream home. This program has become a very practical option for many first time home buyers. Before this program became available borrowers were not able to buy a property that needed repairs or upgrades. All repairs and upgrades had to be done before financing was possible. Most first time home buyers don’t have the up-front cash to invest in a property prior to initially securing the financing. The 203k loan program is ideal for borrowers that want to finance the cost of home improvements into a new loan.
Some of the advantages to a 203k loan program are:
• Low FHA interest rates
• Great property deals
• One simple loan
• Hold on to your savings
The financing for this loan will include the purchase price, as well as the amount needed for improvements. These improvements can be upgrades or what is necessary in order to live in the home.
Eligible improvements for this program are:
• Painting
• Room Additions
• Kitchen Remodeling
• Bathroom Remodeling
• Finished Basement
• Patios and Decks
• Landscaping
• Energy-Efficient Upgrades
• Appliances
• Electrical and Plumbing Upgrades
• Roofing, Siding, and Windows
Note: Luxury improvements that do not become a permanent part of the real property (e.g. swimming pools, hot tubs, gazebos) are not eligible.
The FHA (Federal Housing Administration) offers this loan program to provide the ability to rehabilitate or repair a single family property. One loan is used to purchase the property (or refinance) and the cost of rehabilitation or updating of the home. The eligible properties include condominiums, town homes and single family homes. This loan program is not available for investors or homebuyers who are not buying a primary residence to occupy.
The qualifications for a 203k Loan are the same as an FHA mortgage loan, without the regulations of the usual FHA appraisal standards. The cash requirements are also the same, as in, you must have 3.5% down on the property. However, the improvement loan provides the ability to include up to 6 months of mortgage payments in the improvement escrow, should you not be able to occupy the property and have to pay rent during rehabilitation.
These loans are also available to refinance and remodel your current primary residence. You only need a little bit of equity 3-5%. If you qualify, you may be able to remodel your kitchen, add a master bath, or finish your basement. For more information about this amazing new option visit: (www.hud.gov)
