FHA 203k Renovation Loan Explained | Find The Perfect Loan

If you're looking to purchase a home that needs renovations, an FHA 203k loan could be a great option Homeowners can also use FHA 203k loans to make renovations on their currently owned properties

There are two different types of FHA 203k loans: a standard FHA 203k and a limited, or streamlined 203k Standard FHA 203k loans can be used on any home renovation costing over $5,000, and can include structural alterations, or additions to the existing home Because FHA 203k loans are backed by the Federal Housing Administration, there are many stipulations and regulations put in place by both the FHA and the Department of Housing and Urban Development, or HUD First of all, you are issued a HUD consultant who then approves one general contractor to oversee all of the home repairs the contractor then creates an itemized bid for the labor and materials required for each step of the home repairs of renovation

The contractor gets nothing up front, but rather is reimbursed by the HUD consultant after each step of the repair process The HUD consultant then issues draw requests for funds after each portion of the repair is finished Because of this process, there are additional fees to the standard mortgage insurance and closing costs for the HUD consultant and contractor Limited FHA 203k loans are very similar to Standard FHA 203ks The only difference being that they only cover up to $35,000 of non-structural home improvements, and they have much less complicated paperwork involved

FHA 203k loans have very similar requirments and stipulations as standard FHA loans Borrowers may qualify with a credit score as low as 620 and with a down payment as low as 35% 203k loans can come in several different payment structures, depending on what your looking for, as a homebuyer If you're looking for a fixed rate mortgage, Total Mortgage offers a 15, 20, 25, or 30-year fixed rate 203k loan

We also offer several options for adjustable rate 203k loans, as well Now let's talk about requirements In order to qualify for a 203k loan, you must have a steady employment history of at least 2 years Education also counts as time of employment We also need to make sure that you haven't had any forclosures in the past 3 years, or any bankruptcies in the past 2 years

If you have experienced any types of these credit events, further discussion with a Loan Officer is necessary So to sum it all up, 203k loans are meant for home repairs or renovations for a purchas or refinance You can qualify with a credit score as low as 620 and with a down payment as low as 35% on a home with a minimum repair cost of $5,000 To learn more about FHA 203k loans, and for other mortgage resources, visit totalmortgage