If you have never heard of an FHA 203K Loan, or are wondering what it is, then you are in the right place. An FHA 203K Loan is a loan better known as a “Rehab Loan” and gives the borrower the ability to purchase a home that needs some work or is considered a “fixer upper” and obtain financing for the rehab funds needed on the home. The great thing about this loan is that it is done in all one closing and is found in just one mortgage amount. The FHA 203K Loan borrows to the basic FHA lending guidelines which requires a FICO score of at least 580 and minimum debt to income ratios normally between 45-50% depending on the lender. This is where the program differs from what you see on standard FHA Loans. Where a standard purchase FHA Loan can go up to 56.9% debt to income ratio with a FICO of 620 or higher, FHA 203K Loan is considered a riskier loan and the lender overlays you will see is why the debt to income ratio is between 45-50%.
There are two types of FHA 203K Loan the standard FHA 203K and the FHA 203K Streamline Loan. With the FHA 203K Streamline this is for home buyers who are looking to get rehab funds for the home they currently own. Under this loan option, you can borrow up to $35,000 and from here you will get a new loan that will be your original loan PLUS the $35,000 construction amount. The $35,000 will be rolled into your original loan amount in the 1st lien position so there is no worry for having two payments.
The standard FHA 203K Loan does not have any loan limits for the amount of money you can pull out for repairs and there is also no limitations to the type of repairs you can complete. The list of repairs you can complete are as follows and not limited to: Relocating of load bearing walls, landscaping around the property, repairing structural damage to the home, adding new rooms and structures to the home, etc. There is also no maximum amount you can receive for home repairs, however, you will need to borrow at least $5,000 in most cases. Remember to hire a reliable contractor you can trust. If you want to buy a commercial property you need to find a commercial lender who will help you with your bridge or hard money loan.
As you can see, the FHA 203K Loan is a great option for you if you want to purchase a fixer-upper or if you have a home that needs some work and you don’t want to obtain or can’t obtain an equity loan for the repairs needed. If you are looking for a professional in the FHA 203K Loan arena, then you don’t need to look any further. Please reach out to me any time day or night and even on weekends and I can help you with your mortgage questions and get the process started. Let’s make that new home a reality. I can be reached at 888-900-1020, or by email at firstname.lastname@example.org, or you can inquire through my website www.loanconsultants.org.