Posted on: 29th Aug, 2009 09:22 am
WHAT IS A 203(k) LOAN?
Section 203(k) program is HUD's primary program for the rehabilitation and repair of single family properties
203(b) loan can be used for one-to-four unit dwellings.
Maximum mortgage limitations are the same as for properties under Section 203(b).
203(b) loan can be used for one-to-four unit dwellings.
Maximum mortgage limitations are the same as for properties under Section 203(b).
Sam has good post on this here
http://www.mortgagefit.com/rehabilitation.html
http://www.mortgagefit.com/rehabilitation.html
It is an FHA loan meant to be used to borrow money to buy and additionally to repair a home.
yep. In Short that's correct
in short, yes; but there's more. a 203K loan can also be used in refinancing, if a homeowner desires to do renovations/remodeling/repairs. down payment requirement is also 3.5% for these loans, though calculated slightly different from the standard fha product.
203(k) loan program can help homeowners pay for a variety of home repairs and upgrades. it allows the borrower to take out just one mortgage to cover both the purchase of the property and the cost of upgrades.
and you know what i forgot to add to my post...if a property being purchased is in fine condition, but a buyer wishes to add to it, or renovate a portion of it, a 203k loan can be used for that purpose as well. it's not strictly for repairs or rehabilitation when purchasing.
Maximum loan amount can be:
Current appraised property value + costs of the repair work.
110% of the expected market value of the property
Current appraised property value + costs of the repair work.
110% of the expected market value of the property
203(k) loan is a loan that enables the homebuyer to finance both the purchase and rehabilitation of a home through a single mortgage.This is capturing both the necessary things. A SINGLE portion of the loan is used to pay off the seller's existing mortgage and the ANOTHER remaining portion is used as an escrow account and released as rehabilitation is completed.
Basic guidelines for 203(k) loans are as follows:
1) The home must be at least one year old.
2) The cost of rehabilitation must be at least $5,000, But property value includng cost of repairmust be within the FHA maximum mortgage limit.
3) The 203(k) loan must follow many of the 203(b) eligibility requirements.
You can stress on you lender for following things-
1) specific improvement..
2) energy efficiency
3) structural guidelines.
Basic guidelines for 203(k) loans are as follows:
1) The home must be at least one year old.
2) The cost of rehabilitation must be at least $5,000, But property value includng cost of repairmust be within the FHA maximum mortgage limit.
3) The 203(k) loan must follow many of the 203(b) eligibility requirements.
You can stress on you lender for following things-
1) specific improvement..
2) energy efficiency
3) structural guidelines.
203(k) program is HUD's primary program for the rehabilitation and repair of single family properties. As such, it is an important tool for community and neighborhood revitalization and for expanding homeownership opportunities.