Since the 1930’s the FHA (The U.S Federal Housing Administration) has been providing Americans with the chance to make major improvements to their property and homes by means of their FHA loan program. Almost 40 million homes have reaped the benefits of these programs and the Government has branched out to meet the needs of low income households, the disabled and the elderly.
One of the programs that the FHA offers is the 203k program which allows people to buy homes that need some TLC or repairs, and without forking out a lump sum of cash up front. The program will provide an affordable solution to help pay for those repairs or renovations, so that families can move right into a nice house without the considerable expense of making it fit for living in.
It can be a fairly in depth procedure and although there can be lots of rules and restrictions;, it is a fantastic way for people to make the necessary changes without bankrupting themselves.
FAQ about the 203k FHA loan program:
What are some of the ways that an FHA loan could be beneficial?
Competitive Interest Rates: The low cost of FHA loans are kept down because the government pre-insures the loans for lenders.
Small Deposit: The initial deposit is just 3.5% and the money can be gifted, be put down by an employer, a friend or a family member.
More Chance to Qualify: The loans are insured by the Federal Government, so banks and other lenders will be more enthusiastic about giving applicants the loan.
Bad Credit Rating: Even if applicants have suffered with bad credit ratings and bankruptcy, they will find the application of an FHA insured loan easier to get than a conventional loan from a lending facility.
Helping you keep your home: If home owners fall on hard financial times after purchasing their home, the FHA will work with the home owner and help them to keep their homes.
How much Money can you get with an FHA loan?
There are strict regional limits in place that are worked out according the area that the home is in, and the home values fluctuate depending on that area. Even if home owners can afford a bigger loan or mortgage, the money lender or bank, will not allow home owners to exceed their regional limits. With a range for the areas with home values that are lower, the budget can start at around $271,000, but in areas where the home values are higher, it can go up to $730,000.
What is the 203k Loan from FHA?
The 203k loan is the offer in a program that makes provision for not only the purchase of a home, but also the repairs and renovations that are desperately needed. Most money lenders won’t process a loan to purchase a home until certain repairs are made, so families who find a house in their price range, but that needs repairs, are effectively stuck between a rock and a hard place. That is where the 203k loan comes in.
What loans are available in the 203k loan program?
There is the standard 203k and the Streamlined 203k, offering two separate loan packages. The standard loan program is for renovations and repairs that are complicated in nature; big renovations such structural changes, exterior repairs and major landscaping projects that will need to be thoroughly inspected, and will need an architect as well as an engineer to make the property inhabitable.
The Streamlined loan is a loan that home owners will have a much greater chance of acquiring. With a ceiling of just over $30,000, this is for smaller renovations that won’t require the assistance of specialists and engineers, and that are more along the line of improvements, rather than major structural construction.
What parts of the home can be considered for renovation under the Streamline Program?
Painting and waterproofing both inside and outside the building.
Upgrade, maintenance, replacement or repair of HVAC systems.
Upgrade, replacement or repair of roofs, downspouts, gutters, plumbing, flooring, electrical systems, outside patios, terraces and decks, basement waterproofing, finishing and small cosmetic improvements, septic systems, lead based paint stabilization or abatements, window and door replacement and repairs, weatherization, purchase and installation of appliances such as microwaves, refrigerators, washers and dryers and dishwashers.
Homes that need to make improvements inside or outside the building for physically disabled members of the family can also apply for the FHA 203k loan.