An FHA 203(k) loan is a government-backed mortgage that allows borrowers to finance the purchase of a home and its repairs via a single loan. 203(k) loans are guaranteed by the FHA.
How FHA 203(k) Loan Works ?
FHA 203(k) loan allows an individual to buy a home and renovate it under one fixed-rate or adjustable-rate mortgage. You'll get the purchase or refinance price and the cost of renovation.
CHECK ELIGIBILITY
Who is Eligible for FHA 203(k) Loan ?
Owner/occupants and nonprofit organizations can use 203(k) for one to four unit projects & individuals who intend on making the property their primary residence.
Types of FHA 203(k) Loan
There are two types of 203(k) loan, standard & limited. Standard 203(k) loans are for properties that need extensive structural repairs, while a limited loan is for non-structural repairs.
BORROWING LIMIT OF FHA 203(K) LOAN
FHA 203(k) Loan limits vary depending on where you live. You must borrow at least $5,000 for a standard loan, and there are maximum limits set by the FHA.
FHA 203(k) Loan Down Payment
The minimum down payment for a 203(k) loan is 3.5% upfront, if your credit score is 580 or higher. You’ll have to put down 10% if your credit score is between 500 and 579.
USES OF FHA 203(K) LOAN
FHA 203(k) loan can use to plumbing, flooring, painting, bathroom and kitchen remodeling, improvement of health and safety standards & addition of energy conservation systems.
How to Apply for FHA 203(k) Loan ?
You get a 203(k) loan from an FHA-approved lender, a bank, a credit union, or another financial institution.