FHA 203K Home Improvement or Rehab Loan
203K: The “Solution Loan”
Benefits:
- Build their dream home! Instead of paying for a previous owner’s improvements you may not desire, invest instead in exactly the features, colors, styles, etc. that suit your tastes and needs.
- Save money in the long run! (as opposed to paying interest on a credit card or finance company loan that is much higher and not tax deductible)
- Home Equity Lines are a thing of the past for most buyers due to smaller down payments and reduced LTV/CLTV limits.
- More flexible guidelines with FHA (gift funds, debt ratio, lower down payment, etc). If you know FHA, you know 203K…(basically!)
- By including cost of renovation in your home mortgage, you pay for these improvements over time at a much lower interest expense than conventional alternatives.
- Stronger resale potential
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What can a buyer or seller do with a 203[K] loan?
—Purchase or refinance a property—“Update” a property—Fix a required repair—Make optional improvements like finish a basement
Full 203K
- —Structural Repairs Allowed
- —No maximum repair limit
- —Minimum repair limit $5000.00
- —FHA Consultant Required
- —Contractor can take up to 5 draws
- —Can finance up to six months of PITI if the home cannot be lived in during renovations
- Some repairs can take up to 6 months to complete
Advantages of the Streamline 203[K]
- —Up to $35000 in repairs allowed
- —No structural repairs allowed
- —No FHA consultant required
- —Can be used for refinance!
- —No minimum repair threshold!
- —Quicker and Easier to obtain than a full 203[K]
- —Requires less documentation
- —Does not require an FHA Consultant
- —Faster Closing!
- —110% of appraised value used-never worry about appraised value again!.
