Upgrading Your Home With An FHA 203K Loan
Have you been thinking about buying a home that is in need of some repair or making improvements to your current home, and wondering about possible ways to afford it? An FHA 203K loan offers financial help for current or potential homeowners to make renovations to a property. If you are located in the areas of Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, and want to know more about your home financing options, Foundation Mortgage can help. Continue reading to learn more about making home improvements with an FHA 203K loan.
FHA 203K Loan: Essential Information
The main purpose of an FHA 203K loan, which is insured by the federal government, is to aid homebuyers in financing the purchase of a home and making renovations to the property. They are intended to help people who may have a lower to moderate income afford home ownership. FHA 203K loans have fixed rate or adjustable rate mortgage rate options, and include both the cost of the home and the improvements made to that property. FHA 203K loans are separated into two categories: a standard 203K loan, which offers up to $35,000 in renovations for homes needing substantial repair, and a 203K limited loan, which can cover up to $35,000 in renovations for homes that do not require any major structural reconstruction. There are several advantages that an FHA 203K loan can offer a borrower, including: a lower down payment amount, lower interest rates, less stringent credit requirements, and the opportunity for home ownership for people that may not ordinarily qualify for a home.
What Are The Requirements For An FHA 203K Loan?
Since FHA 203K loans are backed by the Federal Housing Administration, a lender is guaranteed to be repaid if a borrower is unable to make loan payments. Therefore eligibility requirements tend to not be as strict as traditional loans. The typical eligibility requirements for an FHA 203K loan include:
● A borrower must have a lower debt-to-income ratio, (DTI), of at least 43% or less
● You will be required to provide the necessary application documentation, including social security number, credit history, paperwork detailing any additional assets that you may have, and your income verification.
● A borrower must have at least a 500 credit score.
● An FHA 203K loan can only be utilized as the borrower’s primary residence.
● You must make a down payment of at least 3.5%.
● The renovations of the home must be made by a contractor, not the borrower themselves.
● You must not have had a home foreclosed on within the past 3 years.
● The current loan limit for an FHA 203K loan is $472,030 in most locations, and $1,089,300 in more expensive areas.
If you are interested in learning more about financing home repair with an FHA 203K loan in Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, contact Foundation Mortgage today for a consultation.