FHA 203K Loan

disrepairhome.jpg

The FHA 203K loan program is designed to help finance the rehabilitation and repair of  run-down properties. It has been utilized as a primary tool in revitalizing run down neighborhoods.

What is the FHA 203K loan program?

Purchasing a home that needs major repairs can be a difficult proposition because most banks won't lend the buyer the money to purchase the home until all the repairs have been completed. Also, you can't repair a home that you don't own. Thus, the FHA created the 203K loan program to alleviate these problems by facilitating the lending of the funds needed to buy the home before it is repaired. For more general info on FHA loan requirements see this article titled: FHA loan requirements .

Requirements and highlights of the FHA 203K loan program.

  • Property must be one- to four-family structure and can be Condominiums or Town-homes.
  • Proceeds of the loan can only be used for interior rehabilitation of the property.
  • The mortgage amount maximum cannot exceed 100% of the value after the improvements are complete.
  • Appraisal is required for the "After Improved Value".
  • Some lenders may require an "As Is" appraisal as well.
  • Borrower cannot own more than 7 units within a 2 block radius of the property they wish to purchase.
  • Minimum amount required to borrow is $5,000.

disrepair2.jpgFHA Streamline 203K Loan

The FHA streamline 203K loan is designed for homeowners who want to make home improvements to their FHA financed home. The FHA 203k loan is quite similar to the normal FHA streamline refinance loan . Below we have highlighted the key points:

  • You must use at least one qualified contractor. Remodeling by the homeowner is generally not allowed.
  • You must get a detailed estimate from the contractor that includes all costs.
  • The contractor must sign an agreement to perform all the work at the cost estimated and in the time alloted in the estimate.
  • The maximum loan amount is $35,000 and the minimum amount is $5,000.
  • You cannot use the FHA 203k loan for major structural improvements.

Qualifications for FHA loans vary by location. If you are interested in an FHA loan, Lending Tree has recently expanded its service to allow borrowers looking for new loans or refinancing to check their eligibility for FHA loan programs based on their local county-level loan limits and loan-to-value ratios.

You can find out more information about FHA 203K loans at the HUD website: www.hud.gov/offices/hsg/sfh/203k/203kabou.cfm

Related Articles

Source: FHA.gov and HUD.gov
Search All Articles
Related Articles
How To Save On Closing Costs
Homecashsm Many are shocked when they learn how much they owe to close on their mortgage. But there are ways to save before you sign on th
What are the FHA Loan Requirements?
Fha The FHA makes it easy to secure a home loan. The FHA Loan Requirements are described in detail in this article.
Homeowners Insurance
Homeinst Tips on how to shop for homeowners insurance and save money-also avice on flood insurance
Asbestos
Asbestosdanger2_th An information guide on asbestos and asbestos abatement. Also discusses vermiculite and how it relates to asbestos.

More...
Most Popular
If You Must Have An Audit
Auditthumb Audits can make people nervous. We all fear the dreaded "IRS audit"
The Digital TV (DTV) Transition
Tvthumb Converting to DTV will free up parts of the scarce and valuable broadcast spectrum.
How To Stop Debt Collector Contacts
Ringingphone_th Info from the Fair Debt Collection Practices Act on how to stop debt collectors from contacting you.
Selecting A Pool Management Company
Pool The selection of a certified and well trained pool management company is your first line of defense.

More...

Zip Code Profiler

Neighborhoods, Home Values, Schools, City & State Data, Sex Offender Lists, more.

Instant Home Value!
View Site in Mobile | Classic
Share by: