Buy and renovate the house of your dreams with the FHA 30 Year Fixed 203K Purchase & Renovation Loan
If you’re looking at FHA 203k renovation loans in Texas, let Supreme Lending Dallas simplify the process for you. From the qualifications for an FHA 203k loan to down payments and expected financing terms, our team will ensure that your FHA renovation loan process is straightforward, consumer-friendly, and uniquely constructed around your individual goals and needs. To start your exciting renovation loan journey today, fill out the contact form below, or feel free to contact our office.
If you’re buying a home for yourself that’s a bit of a fixer-upper, a 203k FHA rehab loan is the way to go. Also known as a rehab loan or FHA construction loan, 203 FHA rehab loans provide you with financing for both your home and any necessary renovation expenses.
There are certain advantages to 203k FHA rehab loans. For one thing, you can put down as little as 3.5%. (Keep in mind your down payment is based on the value of both the home and the renovations.) You don’t have to apply for a separate loan for remodeling projects after purchasing your home. And you’ll add equity to your home’s value right from the start.
The maximum you can spend on renovations is $35,000 with 203k FHA rehab loans. Remember, however, that you need to allow for an extra 15% in case your contractor experiences overruns. So, in actuality, your renovations should run to no more than $31,000. On the other end of the scale, the minimum amount you can spend on remodeling with an FHA 203k loan is $5,000.
Most non-structural renovations to the interior or exterior of the home are permitted. You’ll be advised to start with essential repairs before you tackle cosmetic enhancements. For example, roof repairs and electrical rewiring take precedence over new carpeting. Most home improvement projects are included, provided they can be completed within six months. You can even use the money to replace major appliances–but not furniture. And minor landscaping and luxury projects (like a swimming pool) are definitely off-limits. (Check out the Housing & Urban Development (HUD) Section 203(k) Loan Program document for a more in-depth explanation of loan benefits and limitations.)
Given all the considerations involved in FHA 203k loans, you probably have a lot of questions. Following are the most common answers to queries about this type of loan. For more general information about our loan services, you can refer to our Frequently Asked Loan Questions.
Unless you are a licensed contractor, you won’t be permitted to do the renovation work yourself with an FHA 203k loan. Nor will you be able to enlist the help of a friend who’s moonlighting, even if they are a contractor at their day job. You’ll need to hire licensed and bonded professional contractors to complete the remodeling work on your new home.
Before you move into your new home, you’ve already saved money by financing the renovation through an FHA 203k loan. Doubtless, you spent far less than the market value when you bought the house, and the repairs you make will immediately add to the value of your home. As a result, you likely will enjoy lower monthly payments than other homeowners in the neighborhood and a higher resale value down the road.
To apply for an FHA 203k loan, the home you are buying must be your primary residence. If you’re “flipping” the house to resell, you won’t be able to buy it with a 203k FHA loan. Another disadvantage is the paperwork, which can be a bit overwhelming. At Supreme Lending, our loan officers have years of experience with rehab loans, so don’t let the thought of paperwork hold you back. We’ll work with you to complete the paperwork and get you into your newly renovated home as quickly as possible!
Yes, homes can be refinanced using FHA 203k loans. The one caveat is that the improvements must be at least $5,000. The maximum loan amount for refinancing your home is based on your existing debts, the cost of improvements and closing costs. Your Supreme Lending loan officer will be happy to explain the details.
If you’ve found the house of your dreams, but it needs a little work, there’s no reason to walk away. 203k FHA rehab loans may be just what you need to get the house you’ve always wanted. Supreme Lending can help with financing that meets your needs. Contact us today!