When to Get an FHA 203k Loan

The FHA 203k loan allows individual borrowers to combine the cost of purchasing a home and rehabilitating it into one mortgage. Typically, a borrower will have to seek an initial mortgage, a loan to rehabilitate the home and then a permanent mortgage once the home has been rehabilitated. The 203 loan streamlines this process.

Qualifying for a 203k Loan

To qualify for this loan, you must be rehabilitating a single family residential property. Most borrowers who elect the 203k loan program are rehabilitating a home in an area that is not currently desirable. Many combine the 203k loan with a local loan program from rehabilitation of a certain neighborhood or city. The loan is available to everyone, but all applicants must be credit worthy.

Advantage of a 203k Loan

Aside from streamlining the rehabilitation loan process, a 203k loan is also advantageous because of the features of all FHA loans. FHA loans are fixed rate, low interest opportunities. FHA loans also have lower down payment requirements and lower income requirements, in most cases. This means a credit worthy person can achieve a quality loan to rebuild a property even if that person does not have a tremendous amount of cash on hand.

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