FHA 203k Loans For Buying A Fixer Upper
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
- Disability accessibility
- Basement waterproofing
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.
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