The 203(k) FHA Loan: Adding on Your Rehab Costs to Your Loan

5 little red houses, The 203(k) FHA Loan: Adding on Your Rehab Costs to Your LoanAn 203(k) FHA Loan, sometimes called a Rehab loan or FHA Construction Loan, allows you to buy or refinance a home that needs work. With this FHA loan, you can include in your mortgage the dollar value needed to repair or upgrade the home. Your loan will then cover the purchase or refinance price and the cost of upgrades, allowing you to pay for the renovations over time as you pay down the mortgage. This is a superb financing tool that may allow you to get into an area where turn-key homes are more expensive. It is important to remember that in order for a lender to approve financing, the home must meet certain safety and livability standards. As 203(k) loans are insured by the Federal Housing Administration, lenders may be able to offer more lenient qualification requirements than other type of renovation loans.

The process for an FHA 203(k) loan is quite similar to that of regular home buying, but with a few extra steps:

  1. Apply with a 203(k) approved lender
  2. Get approval for the loan
  3. Select a contractor for your renovation project
  4. Get estimates for the project
  5. Close the loan
  6. Complete the repairs
  7. Move into your new home

Are you interested in a 203(k) loan or would you like more information? RLG has the tools and resources at its disposal to get you on your way. Call us today to experience firsthand the dedicated, personalized customer service and undivided attention that RLG has to offer!

The FHA Loan: Putting as Little as 3.5% Down

FHA Loan, investment lending

FHA Loan, investment lending

FHA loans are mortgages insured by the Federal Housing Administration (FHA), which can be issued by any FHA-approved lender in the United States. Unlike conventional loans, FHA loans are government-backed, which protects lenders against defaults. This in turn allows lenders to offer prospective borrowers more competitive rates.

The biggest obstacle to most new homebuyers is the feared down payment. But did you know that FHA loans allow down payments as small as 3.5%?

On a $250,000 home, a 3.5% down payment translates to $8,750 – quite a contrast to a traditional 20% down payment of $50,000.

To qualify for a 3.5% down payment with a FHA loan, your credit score needs to be at least 580. If your score is lower than this, you will need to put at least 10% down.

Contact RLG today to see if you qualify!