FHA 203K Home Loan Folsom & Sacramento, CA
The FHA rehab loan program, otherwise known as the 203(K), has been requested more and more by our clients, so I think it’s a good time to talk about it here. The 203(K) is broken into two programs, the Streamline and the Full. This loan program can work with FHA or Conventional home loans. The streamline permits work up to approximately $35,000 including the contingency holdback, and the Full permits more extensive work over $35,000. One thing to note is that this programs is not for any work the FHA deems as a luxury item, such as a pool.
203(K) Streamline Loan
Let’s just talk about the 203(K) Streamline. The Streamline permits homebuyers and homeowners to finance up to $35,000 into their mortgage to repair, improve, or upgrade the home they want to purchase or refinance. The Full 203(K) can go much higher than the streamline. Now, this includes work such as a roof, carpet, kitchen, bathroom, paint, downspouts etc. It’s a pretty extensive list of repairs and upgrades, and you can really improve the value of the home. The actual loan amount is based on the projected value of the home with the repairs and upgrades. Which may mean you walk in with more equity than if you bought a move in ready home. This program may not be used to do major structural work such as adding a room, moving a load-bearing wall or for projects that that will take over 6 months to complete.
203(K) For Homeowners
Are you not sure if you should Move or Improve? If you own a home that needs updating or repairs, you may be able to use a 203(K) Refinance to either make property repairs and improvements, or prepare your home for sale. It’s a great way to make your home move-in ready by remodeling the kitchen, painting the interior or purchasing new carpet. Plus, you have a better chance of getting top dollar for your home when you go to sell, as well as, potentially, a quicker sale when its move in ready! This type of loan product can also help you increase your equity faster. You won’t know unless you check it out.
The mortgage must be a first lien on a one-to-four unit owner-occupied dwelling. Over the years, lenders have successfully used the FHA 203(K) loan program in partnership with state and local housing agencies and nonprofit organizations to rehabilitate properties. This program was critical to municipalities that needed to revitalize neighborhoods and reclaim them as desirable areas to live. This revitalization is also good for the homeowners in the area, that felt helpless as their neighborhoods fell into disrepair, taking their home values down with them.
Everything Good Takes Time
As a loan product, it takes a little extra time and work for all, but this program can be very useful for homebuyers that are interested in a property that needs a little TLC. Buying a property that needs work means you may often get it at a lower price so you aren’t paying for someone else to do the renovations. As a result…instant equity!