Make Improvements To Your Home With An FHA 203K Loan

Are you thinking about buying a home that may need some repairs and upgrades? FHA 203K loans can allow potential homeowners to purchase a property and finance renovations or repairs in a single home loan. If you are located in Conyers, Georgia, and interested in buying a home that requires some reconstruction or fixing up, Preferred Capital Funding can help. Continue reading to learn more about purchasing and making improvements to a property with an FHA 203K loan.

What Is An FHA 203K Loan?

FHA 203K loans are intended to help borrowers finance the purchase of a property as well as make home repairs, and are insured by the government. They were created in order to help people that have a lower to moderate income have the ability to afford a home. An FHA 203K loan includes both the cost of the home itself and improvements made to the home and allows borrowers to have the option of either a fixed or adjustable-rate mortgage. There are two main types of FHA 203K loans; the standard, which is intended for homes needing substantial repair and offers up to $35,000 in renovations, and the 203k limited loan, which can offer up to $35,000 in homes not needing any major structural reconstruction. FHA 203K loans can offer several advantages for a borrower, including lower interest rates, lower down payment amounts, relaxed credit eligibility requirements, and they can provide opportunities for people who may not typically be able to afford a home the chance of home ownership.

Eligibility Requirements for FHA 203K Loans

Because FHA 203K loans are backed by the Federal Housing Administration, and lenders are guaranteed repayment if a borrower defaults on the loan, eligibility requirements tend to be less strict than a traditional loan. Typical qualifications when applying for an FHA 203K loan include:

• You must have a low debt-to-income ratio, (DTI), usually at least 43% or less
• A credit score of at least 500 or higher will be required
• The current loan limits for FHA 203K loans are $420,680 in most areas, and $970,800 in more expensive locations
• You will be required to provide documentation including your credit report, social security number, income verification, and information on any additional held assets and taxes
• You must make a down payment of at least 3.5%
• You must not have foreclosed on a home within the past three years
• The 203K loan may only be used if the property is used as the borrower’s primary residence
• The home renovations must be made by a contractor, not the borrower themselves

If you are interested in an affordable way to purchase and renovate a property in Conyers, Georgia, an FHA 203K loan may be a suitable option for you. Contact Preferred Capital Funding today for a consultation.