Is your dream home a bit of a fixer-upper? You may be looking for a simple way you can finance the purchase of the home as well as the repair work you need to do. That is exactly what an FHA 203k loan is designed for.
What is an FHA 203k Loan?
An FHA 203k loan is a single mortgage you can use to buy a home and fix it up.
When you apply, you estimate how much it will cost to make the necessary repairs and upgrades.
Then, those estimated costs are rolled in with the cost to purchase the home.
Before FHA 203k loans came along, homebuyers shopping for fixer-uppers had to apply for separate loans for home purchase and repairs. Sometimes, they even had to go so far as to work with more than one lender. Each of the loans accrued interest separately, which could make it complicated and expensive to pay them off.
But with an FHA 203k loan, you just make one payment each month. The interest rate you lock in to purchase your home is the same you will be paying for the repair costs.
So, it is easy to keep track of your payments, and you can potentially save money over time on interest.
What Can You Do With an FHA 203k
Loan in Kentucky or Florida?
With a 203k loan, you can buy an unlivable home and turn it into one that is comfortable and functional to inhabit.
Here are some examples of the types of repairs and upgrades you can make:
- Repair, replace, or build a septic system.
- Repair, replace, or add plumbing.
- Put in electrical wiring.
- Make energy efficiency improvements.
- Remodel the kitchen.
- Build a garage.
- Repair a luxury feature like a swimming pool.
What you are not able to do with an FHA 203k loan is add a brand-new luxury feature. So, if there is no swimming pool when you buy the home, you cannot roll the cost of one into the loan.
Still, you may be surprised at some of the upgrades you can make using this type of loan. So, if you are wondering whether the improvements you want to make are possible, just ask during your consultation.
Qualifying for a Kentucky or Florida
FHA 203k Loan
What eligibility requirements are there to successfully apply for an FHA 203k loan?
- Your credit score will need to be in the 620 to 640 range at a minimum.
- Your debt-to-income (DTI) ratio should not exceed 45%.
- You must be able to make a down payment of at least 3.5%.
- You will need to purchase an eligible property. It cannot be an investment property or a cooperative unit.
Buy and Repair Your Dream Home in KY or FL
Are you ready to find out what is possible with an FHA 203k loan in Louisville, KY, Cape Coral, FL, or beyond?
We work with homebuyers throughout the states of Kentucky, Florida, Indiana, Tennessee and Colorado. To schedule your consultation, please give us a call at (502) 327-9770 in Kentucky or at (239) 766-8344 in Florida.