Remodel
HUD’s Section 203(k) loan is one of many FHA programs that make mortgage credit available to borrowers when purchasing or refinancing a home that’s need of repair or modernization. Unlike conventional rehab programs, the 203k has the same relaxed credit and income qualifying and low down payment guidelines as other FHA loan programs. This program works great if you won’t otherwise qualify for conventional loans as a result of income, credit and/or down payment limitations.
Just as conventional renovation loans, the 203k offers a solution that can help borrowers by providing a single, long term, fixed – or adjustable – rate loan which could cover both acquisition and rehabilitation of the property. 203k loans save borrowers time and money.
FHA 203K Features
- Higher level of supervision of homeowner than other programs
- Loan amount depending on Completed Value but capped at FHA maximum mortgage limits inside your county. *adjusted annually
- Very Low 3.5% minimum down payment
- Relaxed Credit and Income qualifying guidelines
- Some limits on different types of repairs
- Investors (non-owner occupied) prohibited
- Fixed or Adjustable rates (ARM’s) available
- Can be joined with FHA’s Officer Next Door and Teacher Next Door home ownership programs.
- Can finance as much as six months of home loan payments for owner-occupied properties to pay non-occupancy costs during construction. For instance, if you need to spend six months renting an apartment while the home renovation takes place, you could roll those expenses into your loan amount.
The HomeStyle ® Renovation Mortgage also lets you obtain a home and repair or improve it with just one loan. You can even use it as a refinancing tool to refinance an existing mortgage and borrow funds for the improvement or repairs towards the home you currently own. Funds used for renovation under the program are capped at 50% in the completed property value the house.
Homestyle® Features:
- Loan amount based completed value but capped at the current FannieMae loan limits. *adjusted annually
- Low 5% minimum down payment
- Reasonably good credit and verifiable income required
- Virtually unlimited on types of repairs but funds for renovation are capped at 75% of the completed value of the property.
- Second homes and investment properties allowed (some limitations apply)
- Fixed or Adjustable rates (ARM’s) available
- Can finance up to six months of mortgage payments for owner-occupied properties to pay non-occupancy costs during construction. As an example, if you need to spend six months renting an apartment while your house renovation occurs, you can roll those expenses into the loan amount.
