Is a 203k Loan Right for You?
Advantages of 203k
* Loan amount based on the home value including renovations
* Only one loan needed to both purchase and improve
* Refinance and rehab your own home
* Can be used to buy property otherwise not eligible for financing
* Refinance and renovate your existing home
* A minimum down payment of 3.5%
* A credit score of 640 or higher
* You currently have no other FHA loans
* You DO NOT have to be a first-time buyer
Ask your 203k loan originator about additional requirements.
FHA Loan limits vary by market. They currently range from $271,050 to $625,500 for a single family property. To check the current loan limits by county, go to entp.hud.gov or check with your loan officer for the current limits. Davina Miller is a 203k expert and loan originator and can help you with all your 203k or construction loan questions. You can contact her at the following link. Georgetown Mortgage.
The Step-by-Step Process:
1. Meet with your favorite 203k lender or mortgage professional to get pre-approved for the FHA loan: They will go over a loan application and will review documentation that supports your application to determine the amount you will be approved for. They will discuss your different loan options and determine the best loan program to fit your needs. NOTE: The purchase contract should clearly indicate the loan type to be an FHA 203k.
2. Purchase contract is accepted by the seller: Your Realtor will forward the accepted contract to your loan officer to set up your financing file. This is when the clock starts ticking. You will need to get with your contractor and/or your FHA consultant to finalize the estimate and scope of work in which is going to be done. Any other required or desired inspections, such as a home inspection, termite inspection, well or septic inspections, roof inspection or HVAC inspections, will be ordered at this time.
3. Choose your general contractor and obtain bids: You must research and select contractors with whom you will feel comfortable. Contractors must provide specific documentation to be accepted for use in the renovation program. You will need to provide a complete contractor package for each contractor completing work on this project.
4. Insurance: In most cases, a homeowners policy will suffice. On some occasions a builders policy will be required. An insurance agent can provide guidance here.
5. Once all conditions to the loan have been met, the loan will close: At closing the seller is paid in full. The funds for the repairs are placed in an escrow account. If mortgage payments are included in the escrow, the payments will be paid when they are due. Repairs must start within 30 days of closing and be completed within six months. Please feel free to fill out the form below if you’d like to know more and there are more helpful links at the bottom of the page.