Mortgage News

What Is the FHA 203K Program?

The FHA 203K loan program provides home buyers the opportunity to buy and fix up a property, without exhausting their personal savings.  Home buyers can purchase a property and include whatever costs to make required repairs or desired updates, or to fully renovate the property, all into one simple thirty-year fixed loan.   ALL work starts after, not during escrow, the purchase of the property, using the money set aside by the lender.
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To qualify for a 203k loanyou'll need to meet the same requirements as any other FHA loan: Your credit score must be at least 620 or 640, depending on the lender. Your maximum debt-to-income ratio can only be 41% to 45% You need a down payment (or home equity if you are refinancing) of 3.5% or more.
What are the drawbacks to an FHA 203k loan? For one, the interest rate is higher than an a simple FHA Purchase loan or refinance. Secondly, it takes some work; you must get bids on the repairs or renovations approved by the underwriter and the money is withheld and invoices submitted to escrow for payment. Also, there is a limit to the renovation loan amount-usually $35,000 up to 100%.
For more information, call Anne E James at 562-320-0510 or email annermsinc@gmail.com.


Posted by Anne James on July 30th, 2018 11:06 AM

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