The FHA is fully committed to increasing home ownership! For that reason, the FHA 203K renovation mortgage program was started to help make certain properties accessible for families to move into and live happily in. Some benefits of an FHA loan include:
- Tax Incentive: Although tax isn't our favorite topic of conversation, mortgage and property tax obligations are a homeowner's best friend once April 15th comes. For both federal and state income taxes, these payments are usually deductible.
- Appreciation: Owning a home is considered to be a secure and steady investment. Value rises while debt decreases.
- Permanence: The home doesn't move - well, usually. Unlike renters who don't know what they'll be paying in a couple years' time, homeowners have the convenience of planning for the future with fixed rate mortgages.
- Equity: Property that is owned rises in value over time, which makes a nice equity buildup for the owner (as a sort of investment). Equity can be utilized to secure a loan or obtain a line of credit, or even be used for big cash emergencies.
- Take Control: Home ownership is a liberating proposition. You gain total control over your living atmosphere. Paint, decorate, and do anything you desire with your home.
203K Loan Requirements - Bring on the Home Improvements!
Did you know that Americans spent approximately $265 billion last year in home renovations alone? Applying for a mortgage, more specifically a 203K renovation mortgage, will enable you to transform your home into what you've always envisioned. A minimum loan value of $5,000 and a variable maximum (not to exceed 100% of the value after the improvements are complete) will help answer the question, How much can I borrow?
A 203K loan is essentially a home improvement loan. The FHA requirements for this type of mortgage make it easy for individuals who want to make home renovations that will increase the value of their home. In addition, FHA 203K renovation mortgages are not restricted to single-family dwellings, but can be used for properties with up to 4 units.
Eligible properties, which fit into 203K loan requirements, are 1 to 4 unit residences, townhomes, condos (interior only), row homes, and HUD (Federal Housing Administration) repos (single unit only). By purchasing a renovation mortgage, you can more easily afford to improve your quality of living.
Renovation mortgages are great because they enable you to fit home improvements into your budget. Details state that improvements can take up to 6 months to complete and the home must be at least one year old.
Types of Improvements 203K Renovations Mortgages Allow
The 203K loan allows, but is not limited to, improvements such as:
- Replacement of roofs, gutters, downspouts, etc.
- New flooring
- Repair and replacement of plumbing and electrical systems
- Painting (both interior and exterior)
- Septic system and/or well repair or replacement
- Replacement or addition of exterior decks, patios, porches, etc.
- Energy efficient rehabilitation
The specific program known as the FHA Streamlined 203K loan allows homebuyers to finance an additional $35,000 into their mortgage to improve or upgrade their home before move-in. It is quick and easy for homebuyers to tap into cash to pay for property repairs or improvements. At MCity Mortgage, Inc., we offer a wide range of rehabilitation loans, as well as energy efficiency discounts! Our representatives are here to speak with you about your eligibility and options.