Is an FHA 203(k) loan right for your purchase? This article looks at a few common situations where people use this helpful program.
Sometime you find a house that would be perfect for you and your family…it just needs a few repairs.
But these repairs cost money, and most people don’t have tens of thousands of dollars to spend on property improvements, especially after funding a downpayment, closing fees, and other costs.
Fortunately, the FHA 203(k) program can help. With this financing option, you can secure money to purchase the property and make upgrades.
So is it right for you? Let’s review some common situations when people typically use the FHA 203(k) program.
FHA 203(k) Loans: A Brief Explanation
This loan program is supported by the FHA and provides financing for home purchases and remodeling or renovations. The benefit, of course, is that homeowners receive a financial cushion that helps them deal with the high costs of remodeling and construction. Instead of paying entirely upfront, they can spread the costs of home improvements over the life of the loan.
Numerous property types are eligible for this financing. They can be used to purchase single-family homes, FHA-approved condos, and certain types of manufactured housing. They can also be used, in a way, as an investment loan, allowing you to purchase a property with as many as four units. The only catch is that you have to live in the property for a certain period in order to use the loan.
There are also details of the program that allow for energy-efficiency upgrades, which can be utilized to enhance a property. The FHA 203(k) program helps make more properties available for purchase by many different buyers. In the end, this means greater homeownership among the American population, and it could be the perfect resource for your next purchase.
When to Use an FHA 203(k) Loan?
When You Want to Buy a House that Needs Significant Repairs
Probably the most obvious use for an FHA 203(k) loan is when you are looking to purchase a house that needs significant repairs in order to be livable. We’re not talking about light paint jobs and new windows, we’re talking about a completely new roof; we’re talking about repairs to the foundation; we’re talking about rebuilding walls and ceilings.
There are many high-potential homes on the market, but they often need major structural work in order to be useful buyers. By using a 203(k) loan, you can make the purchase and still have money for completing these important repairs.
When You Want to Buy a House with Outdated Carpets, Countertops, and Paint
It’s not just large repair work that can be funded with an FHA 203(k) loan. Even if the home is perfectly livable, but simply has outdated carpets, countertops, wall paper, and other aesthetic materials, you can use a 203(k) loan.
Frankly, there were some downright ugly materials used over the decades. Orange countertops, bright green carpet, wallpaper with designs that give you a headache; the list goes on. But you can use the FHA 203(k) program to update the home and give it an elegant, timeless look.
When the Home You Want to Buy Has Accessibility Issues
Accessibility is an important issue for Americans all across the country. Whether they need the assistance of a walking cane or require the use of a wheelchair, a large portion of our population struggles with building and property accessibility. Unfortunately, many homes in the United States are not ready for people who struggle with accessibility.
If you or a family member has accessibility issues, you can use a 203(k) loan to update and improve accessibility. This doesn’t just mean building a ramp to the front door; it can also mean installing grab bars and other bathroom accessories, and the funds could be used to install a lift chair, creating easier access from one floor to another.
When Your Desired Home Needs New Appliances
One of the most common and expensive repairs is the air conditioner. Another is the furnace. These appliances have hundreds of working parts and can easily become damaged and worn throughout the years. Unfortunately, some homes on the market are being sold with outdated appliances, which could turn you away from the purchase.
But the the FHA 203(k) program offers an obvious solution. By providing financing for appliances, this program can help you live in comfort, both the comfort of cool (or warm) air, and the comfort of knowing your appliances are new, efficient, and reliable.
When You Want to Move an Existing Home to a New Location
One of the potential uses for an FHA 203(k) loan is to move an existing home to a new location. That’s right, it is entirely possible to take out a mortgage for the purchase of a home and then relocate that house to a different property, where it will be secured to a new foundation. This is a popular option for manufactured housing and mobile homes, and it could be a wonderful solution for your specific needs.
When the Outside Needs Landscaping
A variety of landscaping projects can also be completed with an FHA 203(k) loan, so if you are considering a house that has significant flaws to the exterior, this loan could be an option. Landscaping projects that you can complete with a 203(k) loan can range from basic updates and improvements to complete overhauls of the exterior.
For example, you can use an FHA loan to build a fence for privacy or pets. You could install a patio or walkway, or build an attractive retaining wall. You could also use the funds from this loan to make landscaping adjustments that enhance drainage, a crucial aspect for the longterm quality and livability of a property.
When Your Current Home Needs Repairs or Remodeling
203(k) loans are not just for new purchases. They can actually be used by current homeowners to improve and renovate a property, allowing them to create a better home. If you live in an owner-occupied single family home, FHA-approved condo, duplex, or any other type of approved housing, you could take advantage of the FHA 203(k) program to improve your property.
Helping You Purchase the Perfect Home with an Affordable FHA 203(k) Loan
Contact our staff today and let us help you secure an affordable loan for your next home purchase. From jumbo loans to 203(k) financing, we are proud to improve your home-buying experience!
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