The FHA 203K is a mortgage loan that is insured by the Federal Housing Administration and allows for the rehabilitation and repair of a single family property.
Traditionally if you bought a fixer upper, you would have to obtain financing to purchase the property (acquistion), then obtain additional financing for the repair of the property (construction), and finally obtain a permanent mortgage when the work is complete to pay off the interim loans. This would often involve short amortization periods and high interest rates.
With the 203K, the borrower can get one mortgage loan at a long term fixed rate to finance the acquisition and the rehabilitation of the property.
The mortgage amount is based upon the projected value of the property with the work completed.
The FHA 203K will allow you as a homebuyer to finance up to an additional $35,000 into your mortgage for the repairs and improvements, as identified by a home inspector or FHA appraiser. All standard FHA underwriting guides apply in regards to credit, income, and asset documentation.
Eligible Improvements Include:
1. Repair/Replacement of roofs, gutters and downspouts
2. Repair/Replacement/upgrade of existing HVAC systems
3. Repair/Replacement/upgrade of plumbing and electrical systems
4. Repair/Replacement of flooring
5. Minor remodeling, such as kitchens, which does not involve structural repairs
6. Painting, both exterior and interior
7. Weatherization, including storm windows and doors, insulation, weather
stripping, etc.
8. Purchase and installation of appliances, including free-standing ranges,
refrigerators, washers/dryers, dishwashers and microwave ovens
9. Accessibility improvements for persons with disabilities
10. Connection to public water or sewage system
11. Repair/replace/add exterior decks, patios, porches, sidewalks, driveways
12. Basement finishing and remodeling, which does not involve structural repairs
13. Basement waterproofing, including mold removal
14. Window and door replacements and exterior wall re-siding
15. Septic system and/or well repair or replacement
All in all, it's just another tool in your belt. Potential buyers shouldn't write off the homes in need of repairs, especially with the advantages of the "streamline (K)" mortgage that is available through FHA. Call or email me today with any further questions. I've probably got just the "fixer upper" for you!
Joe Harrison
Avalon Properties Group
912-230-4294
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Experience the essence of the word "service". My team specializes in residential real estate in the coastal region of Southeast Georgia.
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