| The FHA 203K loan is insured by the Federal Housing | | | | Types of Repairs Covered by FHA 203K |
| Administration. Before this program came about, you | | | | There are several types of home repairs and |
| are required to obtain a temporary loan for buying a | | | | improvement that can be covered by FHA 203K loan. |
| home and another separate loan for home repairs. | | | | These include roof replacement, kitchen remodeling, |
| Completion of the repairs is required so you can obtain | | | | plumbing and electrical work, renovations for |
| permanent financing for your improved home. | | | | accessibility, house painting, and appliance purchases. |
| The Basics of FHA 203K Loan | | | | Cosmetic repairs and beautifications are covered by |
| The FHA 203K loan was originally designed to simplify | | | | the loan. However, luxury purchases and upgrades are |
| the process of purchasing a house that needs repairs. | | | | not permitted. You have to take note that funds |
| To get the funds for repairs, you will get an amount | | | | needed to repair detached structures will not be |
| based on the future appraised value of your home. It | | | | included in the loan. These structures may include |
| means that the value added to the house due to the | | | | sheds, gazebos, and swimming pool. |
| repairs will be considered to calculate the current value. | | | | How to Qualify for FHA 203K Loan |
| You can get as much as $35,000 financing in order to | | | | FHA 203K and other existing FHA home loans have |
| cover the necessary repair costs. | | | | similar eligibility requirements. You can qualify on the |
| Your chosen contractors who will repair the home will | | | | basis of your credit and income. Most important of all, |
| be able to get the money in two draws. The first draw | | | | the property must be FHA approved. |
| covers 50 percent of the work and this will be | | | | As a rule of thumb, the monthly repayment amount |
| disbursed at the start of the repair. The other 50 | | | | must not exceed 41 percent of your regular monthly |
| percent will be disbursed after the repairs have been | | | | income. You must also have a minimum of 620 credit |
| completed. | | | | score which is required by most lenders. Eligible homes |
| The repairs must be started within 30 days after the | | | | include FHA-approved condos, planned urban |
| loan has been closed. The project should be | | | | development homes, sand 1-4 unit houses. You can |
| completed within 6 months. You have to determine the | | | | get this financing if the home has been constructed at |
| final amount that should be given to the contractors | | | | least one year prior to application. |
| before the loan closes. Therefore, you must get the | | | | You can enjoy great benefits from FHA 203K loan. |
| necessary bids from the contractors for materials and | | | | The loan can be used to rehabilitate your property. It is |
| labor costs. You can implement the repairs as long as | | | | also used for renovating foreclosed homes and |
| you are a licensed and bonded contractor. | | | | properties. |