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The FHA 203K program has been utilized as a primary tool in revitalizing run down properties and neighborhoods. This FAQ will answer many questions that a prospective buyer might have.
What is the FHA 203K loan program?
The FHA created the 203K loan program to alleviate the problems associated with purchasing a run-down property. It enables a home buyer to purchase a home in bad shape and make the necessary repairs to rehabilitate the property. For more general info on FHA loan requirements see this article titled: FHA loan requirements.
Is the 203K loan restricted to single family properties?
No, the property can be a one- to four-family structure and condominiums and town-homes are allowed as well.
Can I repair the property myself
Yes, but you will need be approved for this before you close on the loan. You must be qualified to do the work, and do it in a timely and workmanlike manner. A borrower doing their own work can only be paid for the cost of the materials and not their labor. Monies saved can be allocated to cost overruns or additional improvements.
Can a 203K FHA loan be an adjustable rate mortgage?
Yes, as long as the purchaser is an owner-occupant. Investors and non-profits are not eligible.
What is the minimum amount I can borrow on a 203K FHA loan?
The minimum amount is $5,000.
What is the maximum amount I can borrow on an FHA 203k loan?
The mortgage amount maximum cannot exceed 100% of the value after the improvements are complete.
What kind of appraisal is required for a 203K FHA loan?
An "After Improved Value" appraisal will be required from an FHA qualified appraiser.
Can I use the proceeds from a 203K FHA loan to fix my roof?
No, an FHA 203K loan may only be used for interior rehabilitation of the property.
What is an FHA Streamline 203K Loan?
The FHA Streamline 203K Loan is designed for homeowners who want to make home improvements to their FHA financed home. It allows homebuyers to finance an additional $35,000 into their mortgage to improve or upgrade their home before move-in. With this product, homebuyers can quickly and easily tap into cash to pay for property repairs or improvements, such as those identified by a home inspector or FHA appraiser.
Do I qualify for an FHA Loan?
Please remember that qualifications for FHA loans vary by location. If you are interested in an FHA loan, Lending Tree has recently expanded its service to allow borrowers looking for new loans or refinancing to check their eligibility for FHA loan programs based on their local county-level loan limits and loan-to-value ratios.
You can find out more information about FHA 203K loans at the HUD website: www.hud.gov/offices/hsg/sfh/203k/faqs203k.cfm
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