Renovation financing to turn your house into your dream home
With the FHA 203(k) Renovation Loan, you can purchase or refinance your primary home and renovate it — all with one convenient loan. This loan lets a buyer finance the cost of improvements into the purchase or refinance of the home.
Prospect Mortgage has a nationwide team of 203(k) specialists who are helping people to take advantage of the opportunities this program supports, including:
- Purchasing a fixer-upper home in need of upgrades, repairs or larger renovation projects from a traditional home seller, even if the homes is being sold “as is.”
- Buying a foreclosed property from banks, housing agencies and government-sponsored enterprises, as well as properties eligible for short sale transactions.
- Refinancing with today’s low rates and getting the funds you need to make your current home your dream home.
Overview of 203(k) Renovation Loan Features
- Low Down Payments — A minimum down payment of 3.5% down is required. The down payment funds can be money that you have saved, or may be a gift from family members. Loans and grants from down payment assistance programs may also be available. For refinances, the loan amount is up to 97.75% of the value after renovation is complete.
- Flexible Underwriting Guidelines — Typically, you must have a credit score of 640 or higher, and you do not need to be a first-time homebuyer to be eligible for a 203(k) Renovation Loan. If renovation is extensive and the underwriter determines you cannot live in the home during construction, up to six months of mortgage payments — principal, interest, tax and insurance — may be included in the 203(k) Loan, so you don’t need to make double housing payments when the home is uninhabitable.
- Many Types of Property Are Eligible — Single-family residences (either stand-alone homes or attached homes, like row homes), and homes in planned unit developments (PUDs) are 203(k) eligible. Although some restrictions and special rules apply, you can also use 203(k) Renovation financing to purchase and refurbish condominiums, two-to-four unit properties and mixed-use properties.
Prospect Mortgage is one of the top 203(k) lenders in the nation. According to data from the Department of Housing and Urban Development (HUD), for the fiscal year ending September 2012, Prospect Mortgage ranked No.2 in the nation for originating 203(k) Renovation Loans. Our Loan Officers are ready and eager to discuss details of this helpful home-financing solution with you.
Maximum Loan Amounts for 203(k) Loans — The maximum amount you can borrow with a 203(k) Loan for a purchase is the lower of the sales price plus improvements or 96.5% of the after-improved value. For a refinance, it is 97.75% of the after improved value. The amounts are also subject to the standard FHA Loan limits, which vary by market. They currently range from $271,050 to $729,750 for a single-family property. To check the current loan limits by county, go to entp.hud.gov or check with your Loan Officer for the current limits.
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