FHA 203K Renovation Loan

FHA 203K Renovation Loan

An FHA 203(k) loan allows you to buy or refinance a home that needs work and roll the renovation costs into the mortgage. You'll get a loan that covers both the purchase or refinance price and the cost of upgrades, letting you pay for the renovations over time as you pay down the mortgage.

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What is a FHA 203k Renovation Loan?


  • An FHA 203(k) loan allows you to buy or refinance a home that needs work and roll the renovation costs into the mortgage. You'll get a loan that covers both the purchase or refinance price and the cost of upgrades, letting you pay for the renovations over time as you pay down the mortgage.

Advantages



●    Low down payment option (3.5%)

●    Easier requirements for income and credit score.

●    Seller can contribute up to 6% of purchase price.

●    Claim a larger tax deduction (renovation and home purchase interest combined)

●    Avoid plowing through your savings or maxing out credit cards to cover work.

●    Lower closing costs.

Are FHA 203k loans a good idea?

FHA 203k loans are ideal for buyers looking to renovate. You roll all the costs together, only have to deal with single monthly payments and can decide between structural or cosmetic options.

How do I qualify for an FHA 203k loan?

These are some basic and topline requirements for the 203k renovation loan:


  • The FHA 203k loan requirements are similar to that of a standard FHA loan.
  • All borrowers must meet the FHA credit score requirements. The minimum FICO score allowed is 500
  • All borrowers must have the minimum down payment of 3.5%, or 10% if the FICO score is below 580
  • The maximum debt to income ratio is 45% although some lenders may allow more.
  • The loan amount cannot exceed the FHA loan limits for your county.
  • The home must be your primary residence and meet property eligibility requirements.

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