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What is an FHA 203K Loan?

 

supplies

 

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:

 

“Streamline 203K”

- Used for less complex “cosmetic” repairs with total renovation costs of up to $35,000.

“Standard 203K”

- 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

 
*restrictions apply