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Did you know there are 2 types of 203K loans? A streamline 203K loan and a full (traditional) 203K loan. We can help you with both.
Call now for more information (Ray) 303.779.0591 x101
The 203k mortgage is the rehabilitation mortgage for single family homes, and condos. You can refinance your existing mortgage or buy a home and use the 203K loan for improvements. Given the number of foreclosed homes, it is an important tool in neighborhood stabilization. HUD fully supports the community in the pursuit of 203K loans and the lenders who offer them. You can do as little as correcting items that need attention, to as much as your imagination allows (within reason).
Apply here for an FHA 203K mortgage
HOW IS IT DIFFERENT?
Usually when you buy a home there is some work that needs to be done. In today's Colorado real estate market many people are looking for ways to buy homes and build in equity. You can do it through the FHA 203k loan. Most people don't know but the normal home improvement loan referred to as a Home Equity Line of Credit (and YES it is a mortgage) is going to require you have owned your home for at least 12 months to ensure you can use a new appraised value to get equity out to remodel the house. Even after owning the home for a year realistically how much equity can you expect to have?
With the use of the FHA 203K loan, when you purchase your home you actually finance in the costs of improvements to your initial mortgage. FHA lenders factor into the appraised value, the projection of increased value through the expected remodeled finishes. Thus, you have just one permanent mortgage (fixed rate or adjustable rate) and all the rehabilitation costs are rolled into an escrow account where the contractors draw from to complete the work and get paid. Bear in mind you have to live in the house, this is not available for investors. Money not used is applied to reduce the principal balance you owe on your mortgage (so you don't lose it).
Eligible Properties:
- A one to four unit property that has been completed (built) for at least a year
- FHA approved condos
How can you use the FHA 203K:
- Purchase an existing home and rehabilitate it
- Refinance an existing loan and finance in rehabilitation costs
Sample Eligible Repair items:
- Repair or replacement of gutters, roof, downspouts with permit
- HVAC (Heating and air conditioning)
- Upgrade or repair plumbing and electrical systems with permits
- Flooring, windows, doors
- Minor kitchen and bath remodeling , possible permit needed
- Weatherization, painting, basement waterproofing
- Other minor non-structural repairs or structural repairs
- Basement finishing
- Building a garage (you can repair an existing garage; a new garage door)
- Structural alterations
- Repair of existing walkways and driveways
- Installaton of well and septic
- Repair to swimming pools
Ineligible repair items:
Where does the money come from:
Many people think that when they go to write a contact on a home and want to do a 203K loan, they simply increase the purchase price. This is incorrect. Think of it this way by increasing the purchase price, you increase the net proceeds the seller makes from the sale of the home. The FHA 203k loan is just that, a loan. So you don't increase the contract purchase price, RATHER the loan for the home you are buying is increased by the projected cost of improvements. The end result is you typically average 10% equity in the house after your work has been completed.
How much can I add to my mortgage:
The streamline FHA 203k loan allows for $35,000 of money. remaining money is set aside in a contingency reserve for unforseen issues. The full 203K loan allows no limitations so long as you are within allowable loan limits for your county. So make sure you ask about both. Make sure you are working with a lender who can offer you both 203K loans.
To get approved for an FHA 203K loan you must work with an FHA approved lender, and we suggest one who is experienced with not only FHA loans, but home improvements. Make sure your lender can offer both the streamline 203K and full 203K loan, as most lenders in Denver are not able to do this, but we can!Someone who is familiar with home improvements will be able to answer your questions about this topic. We also suggest that you work with an experienced real estate agent who is familiar with home improvements and is investment minded. Feel free to call 303-779-0591 x101 or email for more information on this loan.
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