FHA 203k Loan
Whether you are a buyer looking for the home of your dreams or a real estate professional helping a family in search of an affordable place to live, nothing is more disheartening than finding the ideal property and discovering it is in need of renovation work in order to qualify for financing. Obtaining financing for the purchase and the repairs is no longer a complicated process thanks to MortgageDepot and its FHA 203(k) loan program.
Financing to buy and renovate at the same time
Properties in need of repairs pose challenges under most traditional mortgage programs in which the homes financed must be suitable for occupancy. Homes in need of renovations or repairs before they can be occupied offer affordable alternatives for buyers willing to do the work, but the inability to obtain financing poses an insurmountable barrier. The Federal Housing Administration with its FHA 203(k) program allowing borrowers to obtain the money they need to buy their home and complete any rehab work that might be required solves the problem.
FHA 203(k) loans are available through MortgageDepot and are insured by the federal government. They are only available to finance homes that are at least a year old, and they must be occupied, when renovations are completed, by the borrowers as their primary residence.
Highlights of the 203(k) program
Funding is available for up to 50 percent of structural repairs and a
- Qualifying credit scores as low as 550
- $5,000 minimum repair cost
- 3.5 percent minimum down payment
- Takes into consideration anticipated value after improvements
- Maximum allowable repairs are 50 percent of “
- Close on the purchase before work completed
- Rehab funds held in escrow
- 45 percent maximum debt-to-income ratio
- Not available for cash-out refinancing
- All borrowers must be occupants
- Usually cannot be used with down payment assistance programs
These rehab loans offer buyers and their real estate professionals the opportunity to expand their search for a home knowing the cost of repairs and acquisition can be included in a single, affordable financing package.
Repairs allowable under a 203(k) rehab
The rehab program offers loans to cover the cost of repairs, including:
- Structural repairs
- Remediation of health and safety hazards
- Repair or replacement of plumbing and septic systems
- Addition or replacement of roofing, gutters, and downspouts
- Making a property handicapped accessible
- Addition of energy conservation improvements
Find out more about an FHA 203(k) loan by speaking to one of the mortgage experts at MortgageDepot.