If you are a borrower who is interested in a property that could use some work or are looking into purchasing a distressed property from a foreclosure or short sale, then an FHA 203K might be the right loan program for you. Even though there are a lot of lenders that aren’t in favor a rehab loans, the FHA is still there for you if you intend on rehabbing a home with the intention on living in the home. This is a main requirement for the FHA 203K loan program in that it is only for owner-occupied homes and home flipping is strictly forbidden.
As with all other loan programs out there, the FHA 203K loans have their own set of guidelines that need to be followed if you are hoping on getting a loan approval.
Which Projects Are Covered?
If you were wondering, the rehab funds must be used for specific tasks and even if there is money left-over after the projects are complete, you are not entitled to this money. Most repairs will be covered under this loan except for non-permanent repairs or high-end luxury items. Covered repairs include the following:
– Structural repairs or adjustments
– Converting a home into a multi-unit home or converting a multi-unit home into a single family dwelling.
– New Roofing
– Typical Kitchen or Bathroom Remodels
There is definitely a sequence of events needed in order to facilitate an FHA 203K Loan and these steps need to be followed carefully to ensure proper execution of the loan program.
As you can see, the FHA 203K loan is a great opportunity for those borrowers who are looking to purchase a home that could use some work to make it what is truly desired. This is also an attractive option for borrowers who want to live in a desired neighborhood but cannot purchase fully remodeled homes and the only option might be a distressed property. If this program is appealing to you, then you need to reach out to us at Mortgage Scenarios where we can get this program started for you.