The FHA 203K loan is one single loan that is used to pay for the purchase or refinance of a home and the cost of rehabilitation or updating.
With a 203K loan, you can:
- Borrow up to 110% of what the property will be worth after renovations are complete.*
- Have a low down payment of only 3.5%*.
- Use it to make a purchase or refinance an existing loan.
- Make an offer on a home that wouldn’t normally qualify for a loan due to poor condition.
- Buy a perfectly move-in ready home and change the kitchen cabinets from cherry to maple.
- Refinance your existing loan and update your master bathroom to include that Jacuzzi tub you’ve always wanted.
- Finance items such as painting, room additions, decks and other items even if the home does not need any other improvements.
- Take up to 6 months to complete renovations (renovation must start within 30 days after the close of escrow).
- Finance up to six months of payments into the loan so you can pay for living expenses elsewhere during renovation.
There are two types of 203K loans:
- Used for less complex “cosmetic” repairs with total renovation costs of up to $35,000.
- Used for more complex renovations with a total renovation cost of more than $35,000.
What you can’t do with a 203K Loan
- Luxury items are not eligible as a cost of rehabilitation.
- All improvements must be a PERMANENT part of the real estate