FHA 203(k) LOANS

How Does A 203(k) Mortgage Open Up My Home Buying Options?

Consider a larger selection of homes, including those that are foreclosed, distressed or simply in need of updates.


Make just a 3.5% down payment.

Have a greater chance to qualify for the loan, with more-flexible qualification requirements than conventional mortgages.

Save time and money with a single loan for home purchase and improvement -- one application, one closing/settlement, one-time fees.

Get a mortgage that is assumable and has no prepayment penalties if you should decide to sell, move up or refinance.

Save time looking for a "perfect" home by buying one that you make perfect with your choices of remodeling and repairs.

Save money by combining the home purchase price and remodeling costs in one purchase with a lower interest rate than other options available after purchase.

What homes are covered in the 203(k) loan programs?

Single-family homes are not the only type of building eligible. Townhomes and condominiums can also be purchased with the funds being used for the improvement of the interior only. One-to-four unit buildings can be purchased under the 203(k) loan program. The conversion of a building with a larger number of units down to four or less is also eligible for the loan.

What other details do I need to know?

Energy Efficient Mortgages (EEM) can also be used with the 203(k) loan, with the total of the EEM mortgage being up to 5% of the value of the property. EEM loans allow more-generous qualifying limits for borrowers because reduced utility bills increase your income's borrowing power.Renovation of the property must begin within 30 days of the closing/settlement of the property, and the total time for renovation cannot exceed six months. If the home is uninhabitable during renovation, the Standard 203(k) allows for up to six mortgage payments to be covered while the home is undergoing work. Streamlined 203(k) loans require that the home be habitable the entire time during renovation.

Homeowners can do the renovation work if they demonstrate professional expertise in the type of work planned. However, do-it-yourself homeowners will only be reimbursed for materials used in the renovation, not labor.

Contact Mike@Cribbinrealty.com if you have any questions on a 203 (K).