Who said dream homes have to be built from scratch? You can easily transform an existing structure into the dream abode that you can be proud to call home.
But it takes money to make this happen — and in most cases, a whole lot of it. This is where an FHA 203k loan comes in handy.
If you’re considering buying a fixer-upper or remodeling your existing home, then this is an option for you.
However, if you’re not familiar with this type of mortgage loan, then continue reading!
What is an FHA 203k Loan?
This type of mortgage program is suitable for property owners looking to buy a fixer-upper or renovate a primary residence. What attracts property owners to this program is the fact it doesn’t come with a lot of paperwork.
Overall, the financing process is fairly simple. Back in the day, home buyers had to apply for multiple loans just to buy a fixer-upper, but not anymore.
Once you’re approved for the loan, you can use the money to purchase the fixer-upper property and make renovations.
If you’re remodeling your home, then the money goes straight to your project (after refinancing your property, if you so choose).
What Type of Repair Work Qualifies?
Now, not all property repairs fall under the FHA 203k loan requirements. Funding mainly covers projects involving structural repairs, remodeling, landscaping or a new garage.
However, you can also get a loan to cover energy conservation improvements. This includes roof replacements, appliance upgrades, painting and other non-structural repairs.
Here’s a quick look at some of the other repairs that qualify:
- New siding
- Heating and air conditioning system
- Bathroom and kitchen remodels
- Home additions (garage, balcony, second floor)
You won’t get approved for improvements that are considered luxury upgrades. For instance, installing a pool or building a tennis court. The loan also doesn’t cover improvements that aren’t a permanent piece of the property.
How Much Can I Get?
The type of loan you apply for will determine how much funding you can receive. For instance, you can go with a regular loan, streamlined and purchase loan or refinance loan.
The minimum you can borrow for a regular FHA 203k loan is $5k. The max depends on the Nationwide FHA Mortgage Limits and your loan to value ratio for your property.
Which Properties Qualify?
Now, there are certain types of property that qualify for this type of loan. Here’s a quick rundown:
- A house you’re moving to another site
- A 1–4 family home that was built within the last year
- A partially demolished home that still has an existing foundation
- Non-co-op properties (some condos qualify)
Find an FHA 203k Loan Today
If you’re interested in applying for an FHA mortgage, then the best place to start is online. You can browse for quotes and terms that suit your situation.