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The Lowdown on 203K Loans...

203k Loans

Finding the perfect home can be hard work. You might find something you love, only to realize that it needs some work before you live in it. While you could take out a line of credit after buying the home, that is expensive and a real hassle. You can make the process much easier by getting an FHA 203(k) loan.

This loan covers the cost of the home, along with the cost of repairs. That means you can get your mortgage and still have enough money left over to remodel the kitchen or finish the basement.

If you’re going to get an FHA 203(k) loan, you have to go through one of the Federal Housing Administration’s approved lenders. The U.S. Department of Housing and Urban Development insures the loans. That makes the loan easier to get than some of the other options out there are.

Benefits of an FHA 203(k) Loan

If you’re on the fence about using the FHA 203(k) loan program, you need to check out the benefits.

These loans:

  • Save time on securing the money for repairs.
  • Make repairs more affordable due to lower interest rates.
  • Provide tax deduction options.
  • Speed up the repair process.

Most importantly, FHA 203(k) loans allow you to live in the home of your dreams, even if you have to put some work into the process. This makes it much easier to find a home in California. You can finally pull the trigger on that fixer-upper you’ve had your eye on or get the perfect starter home. These loans open up your options like never before.

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FHA 203(k) Loan Process – Choosing the Loan That Is Right for You

If you decide that you want to get an FHA 203(k) loan, you will need to choose the type of loan that you want. You can select between Streamline 203(k) loans and Standard 203(k) loans. Get the one that is best for your needs

Streamline 203(k) Loans – What You Need to Know

If you want to make repairs quickly, consider the Streamline 203(k) loan. There is no minimum amount that you can spend on repairs, but it does have a limit of $35,000. That gives you a lot of financial wiggle room when making repairs.

You also have a lot of freedom with this loan. You don’t have to hire a consultant, licensed engineer, or architect for this loan. That means you can take care of the repairs as you see fit.

Not all repairs are eligible with this loan. You can do some minor repairs, such as fixing a roof or adding flooring. However, if you have any major repairs that will take a long time, you need to choose the other option.

Standard 203(k) Loan

There is no limit to the amount you can spend on repairs if you get the Standard 203(k) loan. You do have to make a minimum of $5,000 in repairs to qualify for this type of loan, though.

This loan has some guidelines you have to follow. For instance, a HUD consultant has to inspect the property before you qualify for a Standard 203(k) loan. The consultant is also involved with the repairs and costs. He or she will manage the project, so you won’t have as much freedom with this type of loan.

You can do the same repairs you can do with the Streamline 203(k) loan, plus more. Consider this loan if you need to do major repairs, such as structural alterations and septic system installations. You can also do basic remodels or make the home handicapped accessible. There are few limits to what you can do with this type of loan.

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Does Your Property Qualify for a 203(k) Loan?

If the idea of getting a 203(k) loan sounds great to you, you need to make sure your property qualifies. In order to qualify for this loan, you need to purchase or refinance and remodel one of the following:

  • Single-family homes with 1-4 units (attached or detached)
  • Condos that are FHA approved
  • Modular homes
  • Mixed-use developments that meet the conditions and guidelines
  • Homes that have been leveled, as long as some of the original foundation is still in place

It is important to note that in order to qualify, the property must be at least one year old. Any properties newer than one year are not eligible.

You also have to occupy the home in order to get the loan. You cannot use this loan on an investment property.

You also can’t use it for:

  • Mobile homes
  • Cooperatives
  • Properties with construction issues that can’t be fixed
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Qualifying for a Loan

Once you decide that you want a 203(k) loan, it is time to see if you qualify. As with any loan, your lender will look at your credit score, debt-to-income ratio, and down payment to see if you qualify.

It’s important to note that since the federal government backs these loans, some lenders will let you pass through, even if you have less than stellar credit. Even if your credit score isn’t 680, you might be able to find a lender to give you money. That is why it is a good idea to take a pre-qualifier to find out if you qualify.

Along with standard credit requirements, you have to be an eligible borrower. Foreign nationals, corporations, and LLCs are not eligible.

If you aren’t sure if you qualify, you can find out immediately. Take our 203(k) loan qualifier to find out if you qualify for one of these loans.

If you do, we will be ready to help you with the next step. We will help you find the best rate and terms for your loan. We have brokers and lenders in-house, so we can speed up the process and help you get the funds you need in no time at all.

If you’re ready to turn a fixer-upper into a dream home, let us help. See if you qualify for funds so we can get started.

Why a 203K Loan?

The main benefit of these loans is that they give you the ability to buy a home in need of repairs that you might not otherwise have been able to afford to buy. Plus, the down payment requirements are minimal, and often you get decent interest rates.

  • Fixed Rates
  • Adjustable Rates (ARM)
  • Minimal Down Payments
  • Terms from 5 to 30 Years

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