203K Projects make a fixer-upper into your dream home
Are you considering purchasing a home in need of repairs? Did you find a great deal on a bank owned property but can't get a loan approved because of the distressed condition it's in?
As you probably already know, a fixer-upper doesn't usually qualify for a traditional home mortgage. So unless you can pay cash for the property you will need to look into other types of funding such as a construction loan.
An FHA backed 203K loan is a great option for purchasing these types of properties and we have experience in working with lending institutions as the general contractor on behalf of our customers utilizing the 203K program.
Contact us here at Johnson Construction & Remodeling and let us put our experience in completing projects involving 203K loans to work for you.
What is a 203K Project?
A 203K Project is one where the homeowner is using an FHA 203K loan for funding the project. This type of loan is offered by many banking institutions for the purchase and repair of a residential property. This type of loan is common when traditional mortgage financing is unavailable due to the condition of the home being purchased.
Is a 203K loan the type of financing I need for the house I want to buy?
Are you buying a "fixer-upper"? A 203K loan could be a great option for financing your purchase.
What happens after the repairs on the house have been completed?
The loan will be rolled into a traditional home mortgage once the repairs are done, the funds have been dispersed, and all municipal/bank inspections have been completed.
Who is eligible for this type of rehab loan?
Eligibility is the same as any other FHA backed loan:
- Credit score should be above 620
- Debt-to-income ratio shouldn't be over 45%
- You will need to occupy the house you are purchasing
- A down payment of at least 3.5% (the more the better)
Do I need to us a licensed contractor to perform the repairs on the house?
Yes. The terms of a 203K loan require the work to be completed by a licensed contractor. The contractor will be vetted by the lender and will need to provide various documentation prior to the loan being approved.
