FHA 203K REHAB LOAN

FHA 203k Down Payment

As with standard FHA loans the FHA 203k Down Payment is the same, which is a minimum three and a half percent (3.5%). But there is a difference, the FHA 203k down payment is based on the total Sale Price plus rehabilitation cost as oppose to a Regular FHA down Payment that is based off the sale price only.

FHA 203k Rates

FHA 203k Rates in comparison to a Standard FHA loan without rehabilitation funds can typically range from a quarter percent (.25%) to a half percent (.5%) higher. If you take into consideration the advantages of having one loan to purchase or refinance with additional funds included for improvements with minimal down payment or equity it is quite attractive compared to any other alternative.

FHA 203k Streamline Loan

The FHA 203k loan has two versions, the full version that allows for additions, conversions, structural alterations and pretty much all types of major work under or above $35,000. The FHA 203k Streamline loan can be used for minor improvements under $35,000 and does not require the help of a 203k consultant.

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FHA 203K - What is it?

FHA stands for Federal Housing Administration (FHA) and is part of the Department of Housing and Urban Development (HUD). FHA administers a number of single family mortgage insurance programs. These programs are all operated through lending institutions approved by FHA. One of those programs, the FHA 203k loan, is used for the rehabilitation and repair of single family properties. Single family properties include 1-4 units, condos, townhomes and PUD’s. HUD does not make direct loans to consumers (homebuyers or homeowners) but FHA loans are funded by approved 203k Lenders and are then insured by FHA. What makes the FHA 203k Loan different? Most mortgage financing plans provide only permanent financing, in other words, lenders do not usually release funds to close unless the condition and value of the property are adequate enough to secure the loan. When it comes to rehabilitation, this means that the lender usually requires that improvements be made before a long-term mortgage is made. This is where the 203k loan comes into play because those improvements can now be made after the home loan mortgage closes.

FHA 203k Appraisal:

FHA 203k purchases and refinances both require an appraisal. Though here is a difference between a Standard FHA Appraisal and an FHA 203k appraisal. A 203k appraisal will estimate the value of a property by including the improvements and project a “Future Value” of the property while a standard FHA appraisal doesn’t.

203k Loan Requirements

203k Loan Requirements such as credit, income, down payment etc. are the same as Standard FHA loan requirements. Both have the most flexible guidelines with minimal down payment than any other type of loan at this time. The difference between the two is that the FHA 203K will allow for the repairs, rehab or remodeling of your home to be included into the new loan while the Standard FHA 203B won’t.

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