Improve a Home With an FHA 203K Loan
Are you interested in purchasing a home that is in need of repair or have been wanting to make some renovations to your current property? If you need some financial assistance with home renovations, you may want to consider applying for an FHA 203K loan. If you are interested in buying a home that is considered a “fixer-upper” or plan to do some home renovations in San Luis Obispo, California, Central Coast Lending with Mike can help. Read further to better understand how FHA 203K loans work.
FHA 203K Loan Essential Information
FHA 203K loans are a type of mortgage backed by the government and can help borrowers finance the purchase of a home as well as home repairs. The mortgage amount includes both the cost of the home and the cost of maintenance, and it allows borrowers to buy or renovate a home with the option of either a fixed rate or adjustable rate mortgage.
These loans were created in order to assist people with a lower to moderate income afford a home, and they offer several advantages for borrowers. Some benefits include lower down payment options, low interest rates, less stringent eligibility requirements, and they offer certain homebuyers the opportunity to own a home who originally may not have been able to afford one otherwise. There are two main types of FHA 203K loans, the 203K standard which provides up to $35,000 in renovations for homes needing significant structural repair and alterations that cost up to $5,000, and the 203K limited loan, which can provide up to $35,000 in renovations for homes that do not need any major structurally work.
Lending Requirements For FHA 203K Loans
When applying for an FHA 203K loan, there are some eligibility requirements that must be met, including:
- A credit score of 500 or higher is required
- You must have a debt-to-income (DTI) ratio of at least 43% or less
- You must make a down payment of at least 3.5%
- There is a current FHA loan limit of $420,680 in less expensive areas, and a loan limit of $970,800 in higher priced areas
- You will not be able to qualify for an FHA 203K loan if you have foreclosed on a property in the past three years
- You will be required to provide information such as your social security number, your credit report, documentation that verifies your income, asset and tax information, etc.
Assistance Applying For an FHA 203K Loan
If you are looking into buying a home in need of some repair or revamping a current property with an FHA 203K loan in San Luis Obispo, California, contact Central Coast Lending with Mike today for a consultation.