There is a financial product that we believe may be helpful in these tight credit markets. It is a little known or utilized FHA loan called the 203K program. It is a federally insured mortgage program for the purchase, rehabilitation, remodeling or repair of single family properties, townhomes, and condominiums.
It is an important tool for community and neighborhood revitalization and for expanding homeownership opportunities. Purchase and refinance transactions are both eligible for the 203K program.
Two versions are available: one for projects between $5,000.00 and $35,000.00 called the “streamline” and one for projects between $35,000.00 and the regional FHA loan limit of $365,000.00. This is referred to as “full”; this loan covers both the mortgage or refinanced amount plus the amount of any improvements. The improvements are considered as “future value” when appraising the property. In other words, the investment to remodel the property is added to the loan value. So if you have little equity to cover the cost of the remodeling project, the cost is already taken into account in the total amount of the loan.
The interest rates and closing cost appear to be competitive with mortgage market in general.
- First time homebuyers interested in purchasing property in need of repair.
- Existing homeowners who want to repair or remodel their current property.
- Borrowers with limited funds for down payment, closing costs, or necessary repairs.
- Kitchen Remodeling
- Room Additions
- Bathroom Remodeling including master suites
- Finishing basements
- Porches and decks
- Energy efficient upgrades
- Appliances, and electrical and plumbing upgrades
There are additional details and requirements, if you are interested in taking advantage of this program give our company a call at (952) 933-8493 and we will help you get started.