Is a 203K Loan Right for You?

Apr 14, 2021 | Mortgage

Found a home you love that needs some TLC? Or do you already live in a home you love…EXCEPT for some part of it that needs renovation or upgrades? Maybe you are purposely looking for a fixer-upper so you can afford a home in the neighborhood you have been eyeing. If any of these are the case for you, a 203(k) renovation loan might be right for you.

We have some facts for you to help answer some questions about 203(k)loans. And we have the qualified lenders to walk you through every step once you decide that 203(k) is the way to go. So here is what you’ll want to know:

There are two types of 203(k) Loans

You may qualify for standard or limited 203(k) loans. Depending on whether you are renovating and making structural changes, or if you are making smaller upgrades or repairs, you will want to look into the difference between these two types of loans.

The Standard or Full 230(k) is designed for major costs like structural repairs, room additions, major electrical and plumbing. These are overhaul projects that will cost over $35,000.

Limited or Streamlined 203(k) is for non structural improvements up to $35,000. All repairs should be completed within a 6 month period. These are the cosmetic upgrades that make your house feel like home for you.

Whichever you choose, you are investing in the home and gaining equity. A 203(k) loan enables you to borrow the funds you need based on how it will improve the value of your home.

There are borrower requirements:

203(k) loans are an FHA backed loan so you will need to meet the minimum credit score — check out our other blog posts on how to raise your credit score to prequalify for a mortgage loan.

Borrowers must live in the home as their primary residence. This is not a loan for investment properties.

It can be used for:

  • Making Energy Upgrades
  • Plumbing
  • Electric
  • HVAC
  • Landscaping and Hardscaping
  • Roofing
  • Appliance
  • Renovations and additions
  • Flooring
  • Paint
  • Removal of Toxic Substances (like lead-based paint)

Let’s get you on the road to happy homeownership! If a 203(k) loan sounds like it might be what you’re looking for, contact a lender at EPM today by clicking here!