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Trevor Curran's Blog

By Trevor Curran | Mortgage Broker
or Lender in Bronx, NY

FHA 203k Loan Basics for First Time Buyers

The Miracle Rehabilitation Loan 
   Known as the FHA 203k Loan

So many Buyers today are eager to purchase homes at below market prices. Often these homes are in need of serious repairs or improvements to update the property. The 203k Program handily meets the needs of Buyers today.

This miracle program allows a Buyer to purchase a home and obtain the monies for repairs or home improvements all rolled into a single loan with a SINGLE monthly FIXED RATE payment. The repairs can cost as little as $5,000 or can run as high as necessary to fully gut-renovate a home.

The limit on the repair monies included in the loan is the Loan-To-Value (LTV) Limit based on statutory FHA Loan Limits in your area (see below). And this LTV percentage is calculated based on the value of the house AFTER improvements.

The 203k program even has a provision allowing the Buyer to request that up to 6 months worth of mortgage payments be included in the loan so they don’t have to pay two monthly housing
expenses—rent and mortgage—while the house is under construction.

With more and more bank-owned “REO” properties offered for sale, Buyers need the 203k
Program more than ever before.

203k Interest rates run higher than market, but this is still an ideal program to help Buyers achieve their goals of homeownership while simultaneously updating or renovating a home for the lowest possible cost.

Highlights of the 203k Program:

  • Buyer can obtain the cash needed to conduct improvements on a home
  • purchase folded into the same mortgage loan needed to purchase the house.
  • Borrower must qualify according to regular FHA Underwriting criteria with regards to Income, Assets and Credit.
  • The Program is only open to Owner-Occupants; no investors permitted. BUT you do NOT have to be a First-Time Homebuyer.
  • No Income Limits; no minimum income requirements. No geographic limitations, with the exception that the property is here in the good ol’ USA!
  • Purchase + Improvements = ONE Mortgage and ONE Monthly Payment

Current FHA LOAN LIMITS for the New York Metropolitan Region:

  • 1Fam: $729,750
  • 2Fam: $934,200
  • 3Fam: $1,129,250
  • 4Fam: $1,403,400

FHA Basics:

* No Reserves on 1 and 2 Family homes (but it helps!)
* 3 Months Reserves required on 3 and 4 Family homes
* 3.5% Downpayment
* 6% Seller’s Concession

There you have a good fundamental look at the miracle program known as FHA 203k.

Trevor Curran
NMLS #40140


By Brian Petrelli,  Thu Jul 19 2012, 07:17
Great information. Thanks for posting.
By Pat and Steve Pribisko,  Thu Jul 19 2012, 07:27
Good blog. It is good to know that there are somewhat similar programs for VA loans as well.
By Dana Lindberg,  Wed Oct 9 2013, 10:36
Buy a fixer-upper, as is, or a foreclosure with FHA 203k loan and turn it into your dream home. For more details about 203k loan, visit http://www.cfs203k.com. CFS Mortgage and RenovationReady brings together more than 50 years of traditional and renovation lending know-how.

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