So you’ve found a property to buy in the perfect location, community, school district, but the design and features of the house aren’t to your standards? What do you do? We are going to give you step by step all the information on what to do and if this type of loan work for you.
First, what is a 203K Loan?
A 203K loan, also known as a “rehab loan”, is a Federal Housing Administration insured loan that you can apply for that allows a buyer to borrow funds to purchase a property and also pay for the necessary renovations.
There are two types of 203K loans:
The Standard 203k - Loans over $35,000 for more extensive projects like total remodels and structural work.
This type of 203K loan is designed to be used for more complex projects such as structural changes such as room additions or reconstruction that would prevent you from immediately occupying the home. It is also used for renovations requiring engineering or architectural drawings and inspections. There is a minimum rehabilitation cost of $5,000 with restrictions only against luxury items such as installing a new swimming pool, saunas, tennis courts, exterior hot tubs, barbecue pits and satellite dishes.
The Streamlined 203k This type of loan is for more cosmetic-type projects such as kitchen or bathroom remodels, roofs, HVAC, flooring, and paint with renovation work totaling less than $35,000.
“It is meant for properties that do not require structural repairs and will not exceed a total of $35,000. There is no minimum requirement on repairs and can include items such as: gutter repair, painting, flooring repair, lead-based paint stabilization and basement waterproofing. The Streamline k does not require the use of a consultant, architect, and engineer or require as many inspections as the Standard 203k.” - R2
Does the property qualify for the loan? Here are the requirements:
What are the benefits?
- » The loan amount is based on the home value after improvements are made.
- » You will have lower monthly payments with having only one loan and the costs are spread throughout the term of the loan.
- » You will have more choices when searching for your new home because you can look at properties you wouldn't otherwise consider.
- » Improvements can begin right after closing making it faster for you to get into your new home. *Both loan types require renovations to start 30 days after the loan closes and be completed within six months.
- » Interest may be tax deductible.
We’ve made it sound easy right?
The process and paperwork is not as easy as it sounds but we will make it easy for you. With the process of getting this loan a qualified contractor must be hired. We not only help you to obtain the loan but we will the ones to do the repairs. No need to stress and worry, Plumbline Construction will handle all the difficulties for you!
Give us a call today at 804-218-5820 to get the process started.