What is a rehab loan and how does it work?
Rehab loans are designed to help homeowners improve their existing home or buy a home that can benefit from upgrades, repairs, or renovations. A 203(k) rehab loan is a great way to help you create your own home equity fast by bringing your home up to date.
How do you qualify for a 203k loan?
Credit score: You’ll need a credit score of at least 500 to qualify for an FHA 203(k) loan, though some lenders may have a higher minimum. Down payment: The minimum down payment for a 203(k) loan is 3.5% if your credit score is 580 or higher. You’ll have to put down 10% if your credit score is between 500 and 579.
Is it hard to get a 203k loan?
Is an FHA 203k loan hard to get? FHA loans are not hard to get: most lenders work with FHA. However, most lenders do not do 203k Rehab loans. Most lenders do not want to do 203k loans because they take more time, are tougher to get approved, and require more work on the lender’s part.
What are the requirements for a 203K loan?
What is a 203k loan? 203k loans are a type of renovation loan that includes funds to purchase the property plus additional funds to make home improvements and repairs. A minimum 640 credit score is required with a 3.5% down payment.
Are there different types of FHA 203K loans?
FHA 203k Loan Options. While many of the features of an FHA 203k loan are similar to a standard FHA loan, the renovation component makes these loans a little more complex for borrowers. There are two types of 203k loans: a standard option and a streamlined option.
What is the down payment on a 203K FHA loan?
The 203k down payment is just 3.5% of the loan amount. The mortgage insurance premium or MIP on a 203k loan is typically 0.85%. The rate will change according to how much the loan is for and your down payment amount. 203k mortgage closing costs average somewhere between 2%-5% based on the lender and your credit score.
What can you do with a streamline 203K loan?
With streamline loans you can now buy a home, and borrow money for repairs and have just one mortgage payment. A streamline 203k refinance eliminates quite a bit of paperwork that is required for a standard 203k mortgage making it simpler process.