The government’s Federal Housing Administration (FHA) loan program provides financing known as the 203(k) program. The mortgage that a homeowner can receive from the federal government FHA will allow the costs of home improvements, repairs and rehabilitation to be included in the federally insured loan amount that the borrower originates. So this type of financing and loan product will help the homeowner as they will not need to come up with cash or take out another loan or mortgage to pay for any work that needs to be done on the home.
Not only can someone purchase a home with the renovation financing program, but it also allows the buyer to finance and pay for any repairs and-or needed home improvements. The program can be used by individuals and families who are looking to purchase a new home, and it can also be used by existing homeowners who just want to to perform repair or renovation work on their current home. The bottom line is that it provides homeowners with a responsible way to purchase a fixer-upper property or a home that needs repairs.
The are conditions that need to be met when someone receives the loan. The work on the home or property needs to be completed within six months after escrow closes. Sometimes the repairs or improvements that need to be completed are major, and the home may even be unlivable until the rehabilitation is complete. In this case borrowers also have the option of putting up to an additional six months of mortgage payments on the end of the loan if they don't want to live in the house while the work is being completed.
This type of financing is made available to certain banks and lenders by the U.S. Department of Housing and Urban Development (HUD). Thousands of people have taken advantage of this program since it was founded in 1978. The FHA 203(k) program has provided these buyers with the financing and funds they need that are necessary to buy their first home and improve it at the same time. It can also help people greatly improve their current home. There are no income conditions. The Federal Housing Administration 203(k) loan is currently available to borrowers of all income levels, it can be used for homes with one to four units, and loans can also be made to homeowners who plan to occupy the home.
They are very generous and flexible to borrowers. The FHA 203(k) loan offers low down payments and flexible qualifying criteria.
This a great option for people looking to buy and/or repair a home. The 203(k) loan will in effect combine a home's purchase price and cost of repairs and improvements into one fully insured FHA mortgage product. One of the tremendous benefits of this loan product is that it requires only a 3.5% down payment, so it makes the purchase of a home very affordable. The section 203(k) program that is administered by the FHA provides funds to both current and prospective homeowners to make repairs and/or do renovation work. What homeowners will end up with is a single FHA insured mortgage that they need to pay. The total amount of the loan will include the loan amount which will consist of the home's purchase price (or current loan balance in the case of an existing homeowner) plus the estimated costs of the construction work that needs to be performed.
This product is helping the nation recover from the housing crisis. The 203(k) program provides a great opportunity for buyers of foreclosed homes, and it can help real estate investors to sell foreclosed homes and homes that a bank may have repossessed in a short sale. The reason why is that many foreclosed properties were not properly maintained, and the mortgage will provide potential buyers with financing that can help them pay for any work that needs to be done on the home. It can help people who want to renovate a home, and can aid those who desire to buy a fixer-upper or a property that needs some work.
Dial 800-225-5342 to speak to the FHA and their information line. Another option is to call a HUD certified housing counselor in your area. Read more HUD counselors.
Or contact your bank or lender and ask them about this loan product. Almost all lenders have relationship with the Federal Housing Administration (FHA), which is part of the Department of Housing and Urban Development (HUD), and can accept applications for the 203K program.
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