Loans for Home Improvement
What is FHA 203k?
The FHA 203k Loan is a subset of the FHA Loan that provides funds to be used for home improvement/renovation in addition to being a regular mortgage. The FHA 203k loan allows people to have a home equity loan and a home loan all in one, instead of having to take out a separate line of credit for home renovations.
FHA 203k Benefits
Low Interest Rates
Because it is a subset of an FHA loan, the FHA 203k Loan is cheaper than traditional rehabilitation loans due to low interest rates. Therefore, you will typically be able to afford much more with an FHA 203k Loan than you would any other type of renovation loan.
Ease of Use
You can start remodeling as soon as you’re approved for the FHA 203k Loan, and you don’t have to dip into your savings. This allows you to easily start home renovations without too much of a financial burden or hassle.
Increased Property Inventory
If you buy a home with an FHA 203k Loan, you can buy a cheaper home and “fix it up” for a lower cost than you could have purchased it. This will give you a wider range of homes to choose from, because many people don’t like to purchase “fixer-uppers.”
Monthly Mortgage Payment Financing
In many circumstances, you can finance up to six months of pending mortgage payments into your loan.
FHA 203k Loan Qualification
If you’re interested in obtaining an FHA 203k loan, you need to make sure that you meet all of the general FHA Loan qualifications. You will also have to undergo a series of loan-specific requirements such as a third-party inspection, licensing and permits and closing the process once the improvements have been made.