What is the FHA 203K Loan?

FHA 203k loans present home buyers with a different type of loan from the normal mortgage. The 203k loan is designed to help people rehab houses that need repairs. Many mortgage loans do not allow for this type of work as the houses have to be in good shape for the lender to lend against them. Therefore, many that wished to buy an old house and fix it up had to find alternative means to finance the project. With the 203k loan, you can now buy the property and fix it up as you want. 

How it Works

The first thing that you have to do is apply for the FHA 203k loan program. You can do this at any FHA-approved lender. They will then have to inspect the property and appraise it in order to process the loan. You will have to come up with a plan of repairs for the property and submit it to the FHA. 

They will give you the money for the repairs as you need it. Therefore, you can keep getting money as you keep proving that you are fixing the house. If you do not repair the house as you claimed that you would, you may be subject to penalties. 

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