You have always wanted to purchase a home that you could fix up and make your own. A home that needs some TLC normally comes with less competition from other buyers. In a seller’s market this might be a really good idea.
An FHA 203k loan sometimes referred to as a Rehab Loan allows you to finance the house itself, and the repairs of the home.
With an FHA 203k loan the lender is willing to approve a loan on a home it wouldn’t otherwise consider. Under this type of loan the lender must meet certain safety and livability standards. If the home you are considering is more of a project that needs gutting and a total renovation, then this is not the loan for you.
This program can be a good option for people on a tighter budget, who want to buy an older that needs updating, and repair rather than buying a more expensive turn-key home.
The process for an FHA 203k loan is like that of a regular home buying, with a few more hoops to jump through. First you need to locate an approved 203k-lender. Get approved for the loan, locate a home, determine what repairs you need, choose a contractor, get bids, close your loan, and finally complete the repairs needed.
Don’t get stressed out, your lender will help you navigate the process!
Below are a few items you could use your 203k loan to repair on your new home.
- Kitchen and bathroom remodels
- Appliance replacement
- HVAC upgrades or replacements
- Carpet and flooring
- Roof replacement including gutters and downspouts.
- Painting
- Repairing safety and health issues
- Energy-efficient home improvements
Talk with your realtor who can help you locate an approved 203k lender.
By R. Jones
