HUD’s Section 203(k) loan is one of many FHA programs that make
mortgage credit available to borrowers when buying or
refinancing a house that is need of repair or modernization.
Unlike conventional rehab programs, the 203k has the same relaxed
credit and income qualifying and low down payment guidelines
as other FHA loan programs. This program works great for those
who may not otherwise qualify for conventional loans due to
income, credit and/or down payment requirements.
The 203k offers a solution that helps borrowers by providing
a single, long - term, fixed rate or adjustable rate loan
that can cover both the acquisition and rehabilitation
of a property. 203k loans save borrowers both time and money.
Any one-to-four-family owner occupied home is eligilbe as
long as the property is zoned for the applicable number of
units. Condominium units are eligible but Cooperatives are
not. Mixed use property is also eligible with some restrictions.
A 203k mortgage can be used to convert the number of units
a dwelling has. A five unit dwelling for example that would
not otherwise be eligible can be converted to an eligible
four, three, two or one unit using 203k financing.
Most improvements are eligilbe under this program with the
exeption of those considered Luxury items or improvements.
For example you can not put in a new pool but you can repair
an exisiting pool with 203k funds.
A minimum of $5,000 in repairs and/or improvements must bd
done. Painting, carpeting, adding a deck or adding a new room
can be done even if the house needs no other improvements.