Been looking for the most convenient Loan for your house purchase and renovation? Then you have to visit an approved FHA lender. FHA 203k Loans which stands for Federal Housing Administration. Is a type of loan that finances the purchase of a house and also the renovation of a residence. It is a government-insured mortgage. It is majorly intended to refinance primary residence that needs repairs. The requirements of an FHA 203k loan are not as difficult as other housing loan requirements. It is maintained by the Federal Housing Administration.
Since the beginning of the FHA 203k Loan scheme, it has financed the purchase. And also the home renovation of thousands of homes. The loan scheme is the Federal Housing construction loan. Most importantly the loan is a government-backed-up loan and it helps homeowners improve their primary residence. It is majorly a kind of loan that helps families with low-income rates to buy homes. And still, have funds to repair the house. The amount you borrow will cover the cost of the house. And also the cost of renovation which includes the cost of renovation materials. Normally, many lenders are not willing to provide a mortgage for a house that needs repairs but FHA 203k Loans, which are government-insured, give reassurance to lenders. That the cost of the renovation will be included in the mortgage package.
Types of FHA 203k Loans
There are two types of FHA 203k loans which are limited 203k and the standard 203k. Each of the loans has different rules and amounts that can be borrowed.
Limited 203k: the limited 203k is a loan for minimal house repairs. That is, this kind of loan is gotten for house repairs without many structural repairs. Or work like building a pool and the addition of new rooms or kitchens. Limited 203k loan offers $35,000 for repairs.
Standard 203k loan: the standard 203k is a loan for extensive house repairs. This type of loan is eligible for structural repairs and works. Under this loan plan, the renovation cost that can be gotten is $5,000 plus structural repairs. Below are the other projects that can be carried out using an FHA 203k loan
- The house flooring and painting
- Rehabilitation of the kitchen and bathroom
- Safety standards and health improvement
- Landscaping improvement
- Ensure tools for easy accessibility of disabled persons.
FHA Loans Eligibility
It is important to note that you will need to meet up with certain criteria to qualify for the FHA 203k loan. When you have an approved lender. Then you have to go through the required qualification listing of the approved lender. Also, the FHA doesn’t give out the 203k loan, it only insures the loan. You can only get the FHA 203k loan from a bank or credit union. The loan can only cover borrowers with the intentions of;
- Replacement and installation of plumbing
- Structural reconstruction
- Health improvements and elimination of hazards
- House flooring and painting
- Ensure accessibility for a disabled person
- Home improvement and appearance.
If you meet up with the above guidelines, then you can continue with the application process. Compared to other construction loans, FHA 203k loans is lenient. Below are the requirements qualifications
- Your credit score must be at least
- You must have a down payment of 3.5%
- You must not have a foreclosure within the past three years
How do I apply for an FHA 203k loan?
To apply for an FHA 203k loan you need to find an approved lender. You can apply for a loan from your bank, your credit union, or an approved lender. It is important to note that the FHA does not offer an FHA 203k loan. Rather it is just a government mortgage insurer.
In conclusion, the FHA 203k loan is the best loan option if you are searching for a loan for home purchase and renovation. Finally, the loan interest rate is considerate.