There is so much to be gained by borrowers/prospective home buyers by utilizing the FHA 203k program. While it is not the program for everyone, it is something that should be offered and considered when purchasing and refinancing a home.
Here are the top 10 benefits of the FHA 203k for borrowers:
- Little or no additional out of pocket expense
- 3.5% down payment (based on loan + renovation costs)
- As low as 640 credit score and up 50% DTI (debt-to-income)
- Can be utilized for both purchase or refinance transactions
- 110% of improved appraised value
- 6 months of mortgage payments can be included in 203k loan (Standard/full only)
- Can buy any residential property in almost any condition
- Select improvements to suit their own style
- Larger selection of homes to choose from
- The contingency reserve protects from against unforeseen changes
Additionally, here are a few benefits specific to either purchase or refinance transactions:
- Perfect for HUD REOs, foreclosures, and short sales
- Improvements to out-dated homes, kitchens, bathrooms, septic systems, etc.
- Structural deficiencies (termite damage)
- Additions and expansions
- The ability to improve your home instead of moving
- Necessary or optional major/structural repairs
- Build the house of your dreams!