FHA 203k Rehabilitation Loan
The Best Rehabilitation Loan Backed by HUD Yet
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The FHA 203K loan requires a professional lender because of the complexity of the loan. HUD does not provide home improvement loans to homebuyers. It provides insurance to the home lender and secures the loan for renovations. To see if you
qualify for this FHA 203K, call Sun American Mortgage for the best professional person to work out the details for you. |
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Just about the time, you believe that you understand what mortgages are available, along comes one that you have never heard about. The FHA 203K is one that has had little press. This is a combined loan package for homebuyers and homeowners to renovate a property. It is fully insured by HUD to your lender and includes renovation costs on your primary residence.
What Makes the FHA 203K different?
Until now, a buyer would look at a property that needed a new kitchen – or in some cases, all new plumbing lines – and be forced to get interim loans. These construction loans and interim home loans have high interest rates and short pay-off times. The lender does not loan out a primary or permanent loan until the renovations are complete. At that point, the lender has the property appraised and negotiates for the mortgage rate with the rehabilitator or owner. The FHA 203K allows lenders to offer one loan to the buyer that covers the cost of construction and is a permanent mortgage. The mortgage interest rate is lower than the alternative interim method and the lender is fully insured by the federal government.
The 203K Requirements
The first requirement is that the structure is a one-to-four unit family dwelling. This loan does not include primarily commercially zoned properties. However, it does not exclude some commercial use on the property. The maximum mortgage must not exceed 100% of the value of the property after the improvements are complete. Another of the 203K requirements is that certain improvements must be made. These improvements include Energy Conservations standards such as weather stripping and upgrading the insulation on heating and air conditioning ducts.
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Minimum Rehabilitation: $5,000 |
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Loan: $346,250 in Maricopa and
Pinal Counties |
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Down Payment: 3.5% |
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Seller can pay closing cost
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Appraised as if
improvements were complete |
Home Improvement Loans
The 203K renovation loans can be used to buy a dwelling and the land it occupies and renovate it for habitation. It can also be used to buy a house and move it to another foundation and renovate it. This loan is not meant to be used to upgrade the property with luxury items but it does cover appliances, painting, room additions or even decks. At the same time that these improvements are done, the FHA 203K loan can be used to cover finance an existing mortgage.
Renovation Loans
The renovating of property does not mean buying a property to flip it. As with all FHA/HUD loans, any sale of the property must be reviewed and approved by HUD prior to the closing. However, it is great for replacing the leaking windows and installing door seals that did not seem important when the building was built. The FHA 203K does not require that renovations be “necessary” to revitalize the home or even needed to improve the value of the home.
Recent Interview with
Christopher Sign on Channel 15 news:
Mesa company uses mortgage to combine home repair costs
Reported by:
Christopher Sign
Last Update: 5/29/09 5:58 am
"Basically, if you purchase a home for $100,000
and the work you want done costs $20,000, your new purchase price for
the home is $120,000."
said Judi Gustin, a loan officer
with Sun American Mortgage Company.
Gustin says a buyer can use the FHA program to borrow
up to $346,250 and must put 3.5 percent down.
"And you have to spent at least $5,000 to repair or
upgrade the home," said Gustin.
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Sun American Mortgage
BK BR 7548
NMLS# 160265
(888)863-5245
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