You may have heard the term FHA 203k loan. So what is this?
FHA 203k Loan
Are you toying with the idea of buying a house which is a handyman special and turning that into your dream house? This could be a great idea. However, you may just realize that there is a bit of a roadblock in the way. Like many people, you can come up with a down payment and you can get the mortgage to purchase the home. But then you’ll have no cash left to do the repairs and upgrades that you want to do.
So who do you turn to?
The FHA 203k loan may be the solution. This loan is for buyers who want to buy a home with the idea of fixing it up for either a flip or for their own residence..This loan is backed by the federal government. Let me explain how it works.
For instance, the home you want to buy needs a new kitchen and new bathrooms. With a 203k loan, the lender for this program would give you the money to buy or refinance the house. In addition, they’ll also make available the necessary funds to do the renovations.
What types of repairs would the FHA 203k provide funding for? It could cover items like adding a deck, adding a patio, replacing flooring, repairing plumbing, bathroom remodels, kitchen remodels, putting siding on the house, additions, installing new heating and air conditioning systems and much more.
Would you like to use this loan to put it in pool? Sorry, that is not an allowable use of this loan.
Bottom line
The 203k loan will allow you to purchase or refinance a property. in addition, it will provide the funding to make the repairs necessary to make it into a nicer home. There are restrictions as to how much you can borrow, as it’s an FHA Loan program. Also, there are restrictions as to the contractors you hire to do the work. For more details, speak with your mortgage professional.
When you’re ready to either buy or sell a home, please contact us.
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