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Renovate with a 203K Loan

Sometimes you find it hard for you to get some money for repair and renovations of your homes. There are not many lenders out there giving home renovations loans and the ones that give have extremely very tight restrictions. FHA 203K Loans are exactly used for that sole purpose; funding home renovations. Here are some of the most important details that you should know about FHA 203K Loans.

What is a 203k Loan?

Section 203k loan is a loan program that is designed not only to help borrowers to acquire a home but also to improve the status of the home through renovations. Therefore, the loan program includes both the cost of buying and that of renovations. This loan is available to those individuals who are interested in buying and rehabilitating and old home.

The Federal Housing and Administration backs the 203k loans and ensures that they are funded by the 203k mortgage lenders. There are two different types of 203k loan programs namely; standard 203k loans and streamline 203k loans.

 Standard 203k Loans

Standard 203k loans allow the borrower to access sufficient funds that can be used for buying and repairing a home. However, this type of loan is specifically designed for homes that require major renovations. There is no limit to the amount of money the borrower can access.

However, it is important to highlight that there is more paperwork that is required before an individual can be allowed to access standard 203k. A significant number of lenders and borrowers as well don’t like this loan due to the bureaucracies and the paperwork involved.

Some of the repairs and renovations allowed for standard 203k loans have been highlighted below.

• Major relocations

• New constructions such as rood additions

• Structural repair

• Repairs in-need of architectural designs

• Landscaping improvements

• Any repair scheduled to last for more than three months among others

Streamline 203k Loans

 In most cases, people get mortgage loans for buying homes and additional loans for cosmetic repairs. However, with streamline 203k loan, you can get a comprehensive loan package that handles both home purchases and cosmetic repairs.

Streamline 203k loans are highly considered by a considerable number of borrowers and lenders as well as they do not involve much paperwork. There is a simpler loan application and refinance process. The maximum loan amount that one can receive in streamline 203k loans is $35,000.

• Some of the repairs allowed for streamline 203k loans include;

• Roof replacement

• Electrical and plumbing systems

• Door replacement

• Septic or well repair

• Waterproofing repair etc