subject: What is a FHA 203k mortgage? [print this page] What is a FHA 203k mortgage? What is a FHA 203k mortgage?
Lately home ownership has skyrocketed. This is mainly due to the execution of the FHA Home Loan Program. Getting homes has become somewhat easier because of this program. If you take in to consideration, that a home that needs repairs would be somewhat cheaper, then the best way to accommodate that is using a FHA 203k mortgage.
Over the years, FHA has helped Americans realize the rights they have in buying the homes they want. Practical home loan rates for those of the middle class, creating property for the seniors and those with lower income, as well as aiding in military housing are only a few of the many things that FHA has done on their behalf. One of the best ways to finance a home that needs repairs is with a FHA 203k mortgage.
FHA loans provide many advantages to those people who want a home but are limited because they are college graduates, newlyweds, or individuals who are still going to school. The down payment for a FHA Home Loan Program is only 3.5 percent.
FHA 203k Mortgage is among the most favorite FHA home loans. Their interest rates are fixed, so that way it will not change over the years. It allows people to borrow anywhere up to 96.5 percent of their entire mortgage loan. This means the down payments are more affordable. It also brings the settlement cost down to a minimum.
Nonetheless, the requirements to take into consideration in this whole "operation" when you are working with the FHA 203k Mortgage is that there is a minimum income requirement. The individual should be eligible for this prior to receiving the FHA 203K loan.
The debt ratios can be very specific, based solely upon the state the individual resides in. The FHA 203K Mortgage is a wise investment decision because one can obtain the house that they have been seeking out, and simply have the repairs added into their mortgage.
Some may want to use the awesome program for multi unit dwellings. Is that possible or is it restricted to single family dwellings? Yes, you can use this program for one to four unit dwellings. There are some mortgage limitations to consider.
You can even use the FHA 203k mortgage to improve a condominium. There are some restrictions but the possibility to rehab a condo is there. There is even the prospect of using this loan product to rehab a mixed-use residential property. The versatility of this product is amazing.
Since most of the FHA loan products are for first time home buyers, what is the criteria to be considered? It is an individual whom he or his spouse had not owned a home during the three years prior to their application.
There is a minimum amount of rehabilitation you must meet to use the FHA 203k mortgage. It is $5,000 for eligible improvements on the existing structure. Usually minor repairs are unacceptable although they can be added to the minimum amount.
The work has to begin within 30 days of signing the agreement and the work must not stop for no more than 30 days. Now if the costs increase during the rehab time period, you cannot increase the mortgage to cover the increase. That makes it very important to get your work negotiated and in writing with the contractor. Be sure to select a contractor who will accurately estimate the costs at or below the estimated amount.
You may wonder, can you do the work yourself. You can be your own general contractor but you must be qualified to actually do the work and complete it in a timely fashion. The limitation is you can only be paid for the materials and not for doing the work.
The FHA 203k mortgage works very well with those wanting to buy a foreclosure home that needs repairs. They can finance the repairs right into their mortgage.
