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The FHA 203(k) Loan is an easy to use mortgage program specifically designed for those who wish to make improvements on an owner-occupied home they own or would like to buy.
Rather than having to obtain a separate loan to finance the cost of repairs, the FHA 203(k) loan allows you to finance the rehab costs within the first mortgage!
The 203(k) loan program offers two versions that work best for different situations:
The main benefit is having the ability to finance the purchase price and the renovation costs all with one loan and with a great interest rate. The FHA 203(k) loan guidelines also allow for the funds to cover the costs of your temporary housing while the remodeling is being done.
Generally speaking, 203(k) loans can be used for projects that increase the value and/or safety of your home. The FHA lists the following eligible activities for loan funding on its website:
You may use a 203(k) loan to finance the rehabilitation of the following types of properties:
The FHA 203k loan requirements are similar to that of a standard FHA loan.
To qualify for a 203(k) loan, you must:
The biggest difference in qualifying for an FHA 203k mortgage rather than a traditional FHA mortgage is that you must qualify based on the costs of your renovation, in addition to the purchase price.
Here are some pros and cons of an FHA 203(k) loan that may help you decide if it is right for you and your financial situation.
Pros
Cons
The post FHA 203(k) Loans: What You Need To Know appeared first on Owings Mills & Lutherville Mortgage.
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