If you want to purchase a home that needs works or if you want to do an addition to your home, the FHA 203K loan might be the right one for you.
FHA 203K loan for considered “rehab” loans. They can be done as a purchase or refinance and along with doing a normal home loan they provide extra money in an escrow account to pay for repairs or to add an addition to your home. The appraisal is based off the future value after the work is completed. The work must be done by a licensed contract.
These are some of the advantages of FHA 203K mortgages:
FHA loan have flexible qualification requirements. They allow higher debt-to-income (DTI) ratios than conventional loans and your credit does not need to be perfect
This loan will work for properties that are in less than ideal condition. Its often difficult to get financing for properties that are fixers and need major work. With an FHA 203K loan this does not matter as long as the work will be completed with the 203K loan financing.
The appraisal will be based on future value after the repairs or addition is completed. Also, the appraised value can be up to 10% lower than the purchase price the cost of repairs or addition. This added flexibility allows the money for remodeling without the worries of an appraisal not coming in high enough.
Down payments for FHA 203K loans are as low as 3.5% of the purchase price plus 3.5% of the cost of repairs.
An FHA 203K loan can be used for a home purchase or refinance and give you the additional funds you need to remodel your home.
Navigating an FHA 203K loan can be complicated but at The Best Home Loans we are 203K experts having funded many of them. We know the ins and outs of what is required and we can help you close your rehab loan smoothly. To get started with your application, please call (800) 293-2133. We can help you obtain an FHA 203K loan in any of the 50 states.
The Best Home Loans is an Equal Housing Lender. As prohibited by federal law, we do not engage in business practices that discriminate on the basis of race, color, religion, national origin, sex, marital status, age, because all or part of your income may be derived from any public assistance program, or because you have, in good faith, exercised any right under the Consumer Credit Protection Act. Disclaimer: Programs subject to change without notice. All borrowers must qualify per program guidelines.