The 203k Rehab Loan combines the total rehab and acquisition (purchase)Â costs into one loan and one monthly payment. Â The repairs are done after closing.Â Fixed orÂ adjustable rateÂ mortgages are available with 15 and 30 year terms.
There are two versions of the FHA 203K loan - Standard and Streamline.Â The StandardÂ covers more extensive renovations such as a room addition orÂ kitchen makeover.Â This version is typically used with REOs or bank owned foreclosures because those properties usually have more deferred maintenance issues.Â A 203k can also be used to purchaseÂ short sales too.Â
While more complicatedÂ projectsÂ are usuallyÂ done with the 203K Standard, the Streamline (203K-S) versionÂ is used for less extensive repairs.Â Â The Streamline is ideal for one or two projects or to simply purchaseÂ appliances.
A borrower can also refinance into a 203k to make repairs on their current primary residence.Â
Now that I explained the product, IÂ want toÂ share some facts aboutÂ theÂ 203K that areÂ notÂ commonlyÂ known.
You can use theÂ 203K for landscaping:
In addition to doing typical repairs, you can also do:
- add a deck,
- patch the lawn
- adding irrigation
Use the 203K toÂ buy a property with a pool that needs repairs.
Â Â As long as the repairs do not exceed $1,500.00, buyers can roll the cost the repairs into their loan.Â A non working pool must be fixed regardless of the cost of the repairs.Â If the costs exceeds $1500, then the borrower must put the difference in an escrow account prior to closing.Â Buyers can add a pool screen or protective fence.You can also use 203K to replaceÂ Chinese Drywall,Â fix termite damage, mold remediationÂ and to correctÂ code violations.Â The 203K for Energy Efficiency Improvements.
Â Â You can use the 203K to purchase solar panels, new windows, a new air conditione to name a few items.
This loan is wonderful product that allowsÂ potentialÂ homebuyersÂ an opportunity to personalize their first home with a low fixed rate mortgage.
I am an FHA 203K Loan SpecialistÂ and welcome your questions and comments.Â
FHA 203K Rehab LoanÂ Specialist
Freedom Mortgage Corp.