Have you come across a fixer-upper that was almost to good to pass up, but you’ve had to because you thought you couldn’t afford the expensive remodels needed to get the house up to code? There is a solution; The Federal Housing Administration’s rehab loan product, the FHA 203(k) loan, is designed to allow individuals to rehabilitate damaged homes so they can live in it as their primary residence.

FHA 203(k) loans include the money you need for repairs, including materials and labor, in your loan. The loan can also include a 10-20% contingency reserve for expenses above and beyond your repair estimates. You can even get up to six months’ worth of mortgage payments included so you don’t have to worry about your mortgage while you are remodeling your new home.

These loans were created to encourage lenders to offer loans that would otherwise be considered too risky. To qualify, you need to have a down payment of 3.5% of the home’s purchase price plus repair costs. Of course, you will also need to meet all of the normal requirements for an FHA loan as well, like having a steady job, a good credit score, etc.

There are two types of FHA 203(k) loans. They are:

Regular: Regular 203(k)s are for properties that need structural repairs.

Streamlined (also called modified): Streamlined are for those that need only non-structural repairs

Eligible properties include:

•      Single-family to four-family dwellings

•      Existing construction that has been completed for at least one year

•      Tear downs, as long as part of the existing foundation will remain

•      Moving an existing house to a new foundation

•      Rehabbing the residential portion of a mixed-used (commercial/residential) property

•      FHA-approved condos

Home repairs and improvements that can be financed with the 203(k) loan include (but are not limited to):

•      Painting

•      Room additions

•      Decks

•      Patios

•      Site grading and drainage

•      Bathroom remodeling

•      Kitchen remodeling, including appliances

•      Finishing an attic or basement

•      Structural alterations and repairs

•      Adding or decreasing the number of units in a dwelling (e.g., single family to duplex)

•      New siding

If have any questions at all, contact TW Ellis by calling 800-852-8335 or click heretoday!

T.W. Ellis, LLC provides the design and construction of outdoor living spaces such as custom decks, screened rooms and unique additions. The building contracting company, which always works with a qualified architect, services both residential and commercial areas throughout Baltimore county, Harford county, Cecil county, Annapolis, Carroll county and Howard county.

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Sources:

FHA 203(k) Loans Forbes.com