FHA 203K Loan

What is an FHA 203K Loan?
Basically, it’s an FHA loan to purchase or refinance your home with additional funds for your home improvements. FHA which stands for Federal Housing Administration (FHA) is a mortgage insurance and is part of the Department of Housing and Urban Development (HUD). HUD or FHA do not make direct loans to consumers (homebuyers or homeowners) but FHA does insure loans that are funded by approved FHA lenders. FHA insures different types of home loans which one of them is the 203k that is used to rehab properties. The more popular version though is the FHA 203b which does not include funds for rehabilitation.
The Process of the 203k Loan
Find the home you’ll want to purchase and determine what improvements need to be made to the property. The purchase contract offer is written the same as any other, accept you’ll want to make sure that there is language stating the purchase is contingent upon borrower acquiring an FHA 203k Loan.
In order to complete the financing of the improvements, you will need to meet with a contractor to determine what kind of work you are planning and how much it will cost. The contractor will give you a bid, which you’ll need to pass on to the lender. The lender will order an appraisal to determine what the value of the house will be once all of this work is completed. Keep in mind, you’ll also need to be qualified for the full loan amount which is based on the purchase price plus the additional cost of repairs. Once the loan is approved, you will go to closing like you normally would. The amount that will be needed to do all of these repairs or improvements will be placed into an escrow account held by the lender. As the work is being completed, there will be draws from the account to pay the contractor.
Type of work for Streamlined 203(k):
Roof repair, gutters, downspouts
Existing HVAC systems
Plumbing and electrical systems
Flooring
Painting
Appliances
Weatherization
Repair, replace or add exterior decks, patios, porches
What does the Contractor you select need to do?
Provide written work plan and cost estimates
Must include nature and type of repair and the cost of completion
Must be licensed and bonded for each specialized repair
Must agree in writing to complete the work for the amount of the cost estimate and within the allowed time
Quick Quote
Don't Wait! Find out about your options Today!
Our Happy Clients
-
"I wanted to let you know how impressed I was with the job everyone did at your company. I have refinanced several times in the past and usually pick the company that has the lowest rates. Of course I did the same when I chose your company. However, this time I received great service to go with the low rate."
-
"I just wanted to thank you for constantly following up with me. The last time I refinanced it seemed as if I always had to follow up with the mortgage company. Thanks for staying on top of everything and keeping things moving forward."
-
"Your company was so much more professional then the last mortgage company I used. Every question I asked was answered honestly and accurately. I would recommend you to anyone."