A great way to buy a home and get the money to fix it up!
What Is A 203 K?
- This is an FHA loan (FHA rules and limits)
- It allows buyers to purchase a home and set up an escrow for repairs
- It is a one-time close
- A minimum of $5000 in repairs is required
- Part of the repairs must be structural in nature
How Does It Work?
- Buyer gets pre-qualified for home loan
- Buyer selects property of choice with expert REALTOR®
- General contractor & HUD consultant are selected by buyer
- Work write up is completed by consultant
- Home is appraised for “as is” & “after improved” value
- Pre-closed meeting takes place
- Buyer purchases home
Why 203 K?
- Foreclosures or “as is” sales predominate, but repairs necessary
- Customer finds home “almost good enough”
- Modify homes for handicapped
- Add additional space for growing families
- Retain or increase value of property
- Make home “perfect” for the people that live there
Things To Watch For
- Lender requires use of general contractor and HUD consultant, although FHA does not require
- Lender retains all funds
- Six-month limit for repairs to be done
- FHA loan limits apply
- Code compliance should be done so repairs can be included in write-up, if necessary
Results of using 203K loan
You get the opportunity to buy a house that needs repairs, get your loan for the house and the improvements you want done to it, expert repairs by reputable contractors overseen by the lender and a finished product in less than 6 months, most of the time in a lot shorter period.