The FHA 203k loan program provides home buyers with the opportunity to purchase and improve a property without spending their personal savings. With a 203k loan, home buyers can buy a residential property and include all the costs to make the necessary repairs, or to completely renovate the property. All the repairs or renovation work starts after purchasing the property, using the money set aside by the lender.
203k Loans Are Insured by the US Government
The FHA 203k loan program is a type of mortgage loan that makes it possible for individuals to buy a home and include the cost of improvements or rehabilitation. FHA stands for Federal Housing Administration and it is part of the HUD (Department of Housing and Urban Development). The FHA 203k loan program is insured by the US government, and is offers it home buyers through HUD. However, HUD does not give this loan directly. Instead, the loan is offered through approved mortgage lenders throughout the country.
If you wish to apply for an FHA 203k loan, here are some valuable information to keep in mind:
- The maximum amount you can borrow for this loan depends on the limit set by FHA which varies according to location (In Palm Beach and Broward county the loan limit is $345,000) for a single family home. Multi unit limits are higher.
- For eligibility, the participant must occupy at least one unit in the home. Real estate investors cannot use this FHA mortgage loan.
- The program is designed for the property of one to four-unit structure of any size.
- It is sometimes easier to qualify for FHA 203k loan, than a conventional rehab loan.
- You must have a FICO credit score of at least 620 or more, according to most lender’s guidelines.
What Can You Do with a FHA 203k Loan
Besides a property with one to four-unit, other properties that qualify include:
- A home that you wish to move to new location
- A torn down home but with an existing foundation
- There are some condos that are also eligible for FHA 203k loans, if the complexes have a current HUD approval
The minimum property standards for an eligible FHA 203k property include the soundness, safety, and security. The home should have no deficiencies or any poor conditions, in order to qualify, as having proper soundness. The property should have proper security measures and safety standards including protection from any physical or health hazards.
The great advantage of an FHA 203k loan is that you will get the opportunity to buy or fix your current home that requires repairs/renovations and have it fully financed. An FHA 203k loan is a great opportunity for you to own or renovate your dream home.
The team of licensed mortgage brokers at Mortgage Biz of Florida can help you check eligibility, get you pre-approved for a 203K mortgage loan and help you in process of purchasing your next home. Call us today to learn more about the FHA 203k loan program or to check some of the other programs available to you from our many lending partners.