203k FHA Loan FAQ

The FHA 203K program has been utilized as a primary tool in revitalizing run down properties and neighborhoods. This FAQ will answer many questions that a prospective buyer might have.

What is the FHA 203K loan program?

The FHA created the 203K loan program to alleviate the problems associated with purchasing a run-down property. It enables a home buyer to purchase a home in bad shape and make the necessary repairs to rehabilitate the property. For more general info on FHA loan requirements see this article titled: FHA loan requirements.

Is the 203K loan restricted to single family properties?

No, the property can be a one- to four-family structure and condominiums and town-homes are allowed as well.

Can I repair the property myself

Yes, but you will need be approved for this before you close on the loan. You must be qualified to do the work, and do it in a timely and workmanlike manner. A borrower doing their own work can only be paid for the cost of the materials and not their labor. Monies saved can be allocated to cost overruns or additional improvements.

Can a 203K FHA loan be an adjustable rate mortgage?

Yes, as long as the purchaser is an owner-occupant. Investors and non-profits are not eligible.

What is the minimum amount I can borrow on a 203K FHA loan?

The minimum amount is $5,000.

What is the maximum amount I can borrow on an FHA 203k loan?

The mortgage amount maximum cannot exceed 100% of the value after the improvements are complete.

What kind of appraisal is required for a 203K FHA loan?

An "After Improved Value" appraisal will be required from an FHA qualified appraiser.

Can I use the proceeds from a 203K FHA loan to fix my roof?

No, an FHA 203K loan may only be used for interior rehabilitation of the property.

What is an FHA Streamline 203K Loan?

The FHA Streamline 203K Loan is designed for homeowners who want to make home improvements to their FHA financed home. It allows homebuyers to finance an additional $35,000 into their mortgage to improve or upgrade their home before move-in. With this product, homebuyers can quickly and easily tap into cash to pay for property repairs or improvements, such as those identified by a home inspector or FHA appraiser.

Do I qualify for an FHA Loan?

Please remember that qualifications for FHA loans vary by location. If you are interested in an FHA loan, Lending Tree has recently expanded its service to allow borrowers looking for new loans or refinancing to check their eligibility for FHA loan programs based on their local county-level loan limits and loan-to-value ratios.

You can find out more information about FHA 203K loans at the HUD website: www.hud.gov/offices/hsg/sfh/203k/faqs203k.cfm

Source: FHA.gov and HUD.gov

Search All Articles

Related Articles: How To Save On Closing Costs; Many are shocked when they learn how much they owe to close on their mortgage. But there are ways to save before you sign on th; What are the FHA Loan Requirements?; The FHA makes it easy to secure a home loan. The FHA Loan Requirements are described in detail in this article.; Homeowners Insurance; Tips on how to shop for homeowners insurance and save money-also avice on flood insurance; Asbestos; An information guide on asbestos and asbestos abatement. Also discusses vermiculite and how it relates to asbestos.; More...

Most Popular: What Are Earmarks?; In the last election both McCain and Obama promised to end earmarks, if they were elected.; Selecting a Certified Public Accountant (CPA); Tips for choosing a CPA and a sample RFP to engage one; Ask Before You Alter; Information for homeowners altering their property within deed restriction guidelines; sample forms available; What are the Responsibilities of Board Members?; Like the national government, the president has different duties than the secretary, who has different duties from the treasurer; More...