How does 203k work?
203k is a loan with a twist. FHA 203k is for homeowners and homebuyers with properties that do not meet FHA minimum health and safety standards.
The major advantage of an FHA loan is that it only requires a 3.5% down payment. When buying a house that needs repair or modernization, homebuyers usually have to follow a
complicated and costly process. The interim acquisition and improvement loans often have relatively high interest rates, short repayment terms and a balloon payment.
The 203k loan offers a solution
that helps both borrowers and lenders, insuring a single, long term, fixed or adjustable rate loan that covers both acquisition and rehabilitation of a property.
A 203k insured loan saves borrowers time and money. It also protects the lenders by allowing them to have the loan insured even before the condition and value of the property may offer adequate security.
For less extensive repairs/improvements. Loans for non structural projects costing $35,000 or less.
See Limited 203k. For housing rehabilitation activities that do not also require buying or refinancing the property, borrowers may also consider HUD's Title I Property Improvement Loan program.