203k Consultant | All You Need to Know About 203K Loans
203K loans are backed by the Federal Housing Administration (FHA), allowing a person to buy and/or improve a home with one loan only. 203K loans are quite popular these days for various reasons, one of which is that lenders bear lesser risk.
In other words, lenders are more willing to offer this type of loan at lower interest rates. Basically, 203K loans enable you to turn a property into a home via improvements and get it off the listings. Here are some basics our 203K consultants want you to know about this type of loan.
Homeowners, as well as nonprofit organizations, may use 203K loans for one to four-unit homes. Investors are not granted approval for this loan program. Owners of condos and townhouses may also use this program for interior projects. The ideal debt to income ratio for 203K is over 31/43. You also need to show proof that you can bear the mortgage repayment, regardless of your credit score.
Purpose of Loan
You may use 203K loan for the following uses:
- Purchase and Repairs – In order to purchase a property and/or make key improvements, you can take out this loan.
- Temporary Housing – In case your current settlement falls under construction zone, you can get 203K financing to make temporary housing arrangements for a period of six months.
The minimum loan amount for 203K is $5,000, while the maximum is $270,000. Smaller projects can also be funded with what is known as Streamlined 203K. Note that in some cases you can borrow up to 110% of the financing required for the project. The interest rate depends on your credit score, but is typically 1% or higher. The down payment you need to make should be 3.5% minimum, but making a larger down payment is always better (if feasible).
Want to learn more about 203K loans? Contact us today and we’ll send our 203K consultant to help you make the right decision!