FHA 203(K) mortgage loans are a good choice for buying a home that needs a little TLC. Simply put, these rehab loans finance both the home itself and any needed or wanted repairs you need to make as well.
FHA 203(K) mortgage loans cover a variety of repairs and improvements, starting with any safety or health hazard issues, which the lender will require. From there, buyers can choose whatever cosmetic items they want replaced, from new kitchen counters and appliances to bathroom fixtures and flooring.
FHA 203(K) mortgage loans require borrowers to work a little more closely with their lender than a conventional mortgage, especially in the beginning. After you’re approved for a loan and figure out what repairs are needed, you’ll then need to get bids, choose a contractor, submit everything to the lender, close the loan, and navigate your way through the construction process.
Once you have an idea of what the home you’re planning to buy needs you’ll need to choose a contractor. Not surprisingly, the contractors must be licensed and insured, and it’s also recommended you choose a contractor who has done at least one 203K renovation previously. Extra 203K paperwork is common and you’ll want someone who is prepared to handle everything that goes along with this type of financing.
Wondering if 203(K) financing is a good fit for your situation? If you’re open to the process or love a good project, rehab loans can be a great way to buy a home and put instant equity into it.
The interest rates you see here are an average of the published annual percentage rate with the lowest points from a sampling of major national lenders. Contact us about what your interest rate might look like or click below to learn more about how interest rates are calculated.