FHA 203K Loan

Directed and authorized by the Federal Housing Administration (FHA), FHA 203K is a perfect mortgage option for home buyers who don’t mind doing renovations to the home they purchase. It can be your ideal financing option to purchase your dream home and complete renovations which can be covered by your loan!

With limited lender overlays for down payments and credit score, the FHA 203K option substantially reduces your loan paperwork when compared to conventional financing options, thus simplifying the process considerably.

However, to avoid any unpleasant surprises and delays in completing your loan terms, ask your lender about details of requirements issued by both the FHA and the lender themselves.

FHA 203K Guidelines

Following are the requirements a homebuyer needs to fulfill in order to become eligible for the FHA 203K mortgage:

  • Your sales and purchase agreementmust specify that you will be using the FHA 203K loan, as your offer becomes dependent on the approval of your loan.
  • Only HUD (U.S. Department of Housing and Urban Development)qualified lenders are permitted to process the application and provide approval for your FHA 203K loan.
  • The FHA 203K loan also includes property plus rehab costs. Make sure to acquire and included all details of every repair your home needs, including the costs. These costs will be predetermined in your loan amount, and will be used by your lender to pay off your contractor, once the repairs begin after the loan closing.
  • Minimum credit score, proof of income, debt-to-income (DTI) ratio, and other requirements will be specified by the lender, which you will have to meet for loan approval.

Once approved, you will receive a closing date for your loan. At this stage, your property’s seller will be paid. The sum for rehab costs will be invested in an escrow amount, and will be controlled by your lender.

The lender will inspect all forthcoming repairs, and pay for these with the money in the escrow account.

Want to learn more about the FHA 203K loan terms and requirements? The experts at Mortgage Scenarios offer home loan underwriting services with complete guidance!

Let’s get you a quick approval!