The Best FHA 203k Loan
FHA 203k Renovation Loan
What is a FHA 203k Loan?
FHA 203k loans — also known as FHA renovation loans — allow homebuyers to finance both the purchase of a house and the cost fix up (or modernize) the home through a single mortgage. It can also be used by existing homeowners to refinance and include the home improvements of their existing home. The loan amount will be based on the value of the home as if the repairs were completed, not the existing condition of the home.
FHA 203k loans can provide many advantages for homebuyers who
- Are interested in purchasing a property that needs repairs
- Want to make improvements their home
- Have limited cash for down payment, closing costs and repairs
- Want to save time and money by financing the cost of the repairs
- Have low-to-moderate income
- Have credit blemishes or low credit scores
- Want to avoid costly home improvement, hard money or bridge loans
Homebuyers can
- Buy less than perfect homes in great locations and turn them into dream homes
- Eliminate property problems sooner rather than later
- Expand a home to meet their needs
FHA 203k Eligible Repairs
The cost of home improvements that are covered by the FHA 203K loan program may range from relatively minor (though exceeding $5000 in cost) to virtual reconstruction.
The list of allowable repairs include:
- Structural Alterations and Reconstruction
- examples:
- a home that is demolished and rebuilt as long as the existing foundation system remains in place.
- adding additional square footage (ex. additional bedrooms)
- finishing your basement
- examples:
- Modernization and Improvements to Your Home’s Function
- examples:
- energy efficient improvements
- new windows and doors
- electrical upgrades
- repair, addition or replacement of roofs, fascia, soffits, gutters and downspouts
- repairs or replacement of air conditioning and heating (HVAC) systems
- upgrading to a tankless water heater or energystar water heater
- adding or upgrading insulation and weather stripping
- installing solar energy panels
- fix drainage issues
- examples:
- Fix or Remove Health and Safety Hazards
- examples:
- lead-based paint abatement
- improve or add handicap accessibility
- examples:
- Changes that Improve Appearance and Eliminate Obsolescence
- examples:
- kitchen renovation
- bathroom upgrades
- new appliances
- new interior and/or exterior paint
- examples:
- new interior and/or exterior paint
- Installing a Well and/or Septic System
- Adding or Replacing Floors and/or Floor Treatments
- Major Landscape Work and Site Improvements
- Repairs, Additions or Replacement of Decks, Patios & Porches
- And More!
So, How Do I Qualify for an FHA 203k Loan?
If you can qualify for a traditional FHA loan, then you can probably qualify for a 203k loan.
Typical qualification guidelines include:
- Credit score of at least 620
- 3.5% down payment
- Meet the flexible FHA debt to income requirements
- Follow the 203k renovation guidelines for either a streamline 203k loan or a full 203k loan
- The total value of the home must remain under the FHA mortgage limit for your area
