What is a FHA 203 K loan?

A boon to DIYers and home project enthusiasts, an FHA 203(k) loan – also known as a mortgage rehabilitation loan, renovation loan or Section 203(k) loan – is a type of government loan that can be used to fund both a home’s purchase and renovations under a single mortgage.

What is the difference between an 203b FHA loan and an 203k FHA loan?

An FHA 203(k) loan is used to assist home buyers that are purchasing a home that is in need of significant repairs or modifications. An FHA 203(b) loan, on the other hand, is primarily used for move-in ready homes. A home would need at least $5,000 in essential repairs to qualify for an FHA 203(k) loan.

Is 203k a conventional loan?

FHA 203(k) Loan Offered by the U.S. Department of Housing and Urban Development (HUD), this loan is backed and insured by the FHA. While only approved lenders, such as Contour Mortgage, can offer these, they also have slightly more lenient terms than conventional mortgages.

Can you refinance a 203k loan?

In short, yes you can refinance and remodel with the FHA 203k loan. Rolling the mortgage you have now, plus the renovations and improvements you want to do, is possible with the 203k. The new mortgage will include what you owed on the previous loan PLUS the work you’re financing.

How do I get pre approved for a FHA 203k loan?

To qualify for an FHA 203(k) loan, you’ll have to meet the same FHA requirements you would for a standard loan. These include the credit score and down payment minimums mentioned above, as well as having a debt-to-income ratio of at least 50%. The property you’re buying or refinancing must be your primary residence.

What is an annual FHA 203 B mortgage insurance premium?

The maximum upfront fee that you will have to pay is 1.75% of the base loan amount. So, for a $200,000 home, that would be $3,000. This amount is paid at the time of closing as part of your closing costs.

Do 203k loans have PMI?

Just keep in mind that if you’re putting less than 20% down, you’ll be required to pay PMI until you’ve reached 20% equity in your home. One of the benefits of the 203(k) loan is its low down payment option of 3.5%.