FHA 203k Loans For Buying A Fixer Upper

By Todd Fratzel on Financing

This is a guest post written by Brandon Laughridge of Mortgage Loan Place.

FHA 203k Loans

Have you tried to get a construction loan or borrow for rehabbing lately? A few years ago, it was as easy applying, having a bit of income (maybe), and having a little equity in the property. However, in today’s market it’s difficult to get favorable loan-to-value ratios on conventional loan products. It’s not completely bad though, the FHA’s 203(k) loan is still available!

The FHA 203(k) loan program was created to help prospective homeowners purchase a house in need of rehabilitation and roll most of the fix up costs into the mortgage. Like all FHA loans, this program can be used on single family homes and two to four unit multifamily properties assuming the owner occupies one unit. The maximum repairs a buyer can finance is currently $35,000.

Repairs explicitly allowed as part of the program:

  • Roofs, gutters, and downspouts,
  • Replacement of HVAC systems
  • Replacement of plumbing and electrical systems
  • Flooring replacements
  • Non structural remodeling
  • Painting
  • Disability accessibility
  • Basement waterproofing
  • Weatherization

And, of course, the repairs that are not allowed:

  • Major remodeling such as moving walls
  • New construction of any kind
  • Structural issues
  • Landscaping or other luxury items
  • Anything that requires an architect

The market is ripe to pick up a huge chunk of equity by using a 203(k) loan to finance an already discounted fixer upper. If you’re handy and find the right property, I highly recommend contacting a loan officer about using a FHA 203(k) loan to finance your purchase.

The guest post was written by Brandon Laughridge of Mortgage Loan Place. MLP specializes in educating consumers about all aspects of mortgages, including home loans and loan modifications.

About the author

Todd Fratzel

I'm full time builder for a large construction company in New Hampshire. I run their design-build division that specializes in custom homes, commercial design-build projects and sub-divisions. I'm also a licensed civil and structural engineer with extensive experience in civil and structural design and home construction. My hope is that I can share my experience in the home construction, home improvement and home renovation profession with other builders and home owners. I'm also the Editor-in-Chief and Founder of Tool Box Buzz. Please feel free to contact me if you have any questions, suggestions or you'd like to inquire about advertising on this site.

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