There are some important features to remember when looking into a FHA 203K Rehab loan. These are great loans for buyers looking to purchase a foreclosure or short sale or for the home owner who wants to update or remodel there house. Below are a few important things to remember:
- FHA loans are for primary residences only – You cannot be an investor and try to get a FHA loan or a FHA 203K rehab loan. This is really important – I cannot tell you how many calls we get from investors looking to utilize this program and or skirt the system. FHA loans are for primary residences only!
- Two types of FHA 203K loans – You can go with a Full 203K or the FHA Limited 203K. The main difference between the two is that you can only get up to $35,000 with the FHA Limited 203K and the repairs must be cosmetic in nature, nothing structural.
- Single close loan – Unlike traditional construction lending, you only have one closing with the FHA 203K loan. No need for construction loans and then permanent financing with the FHA 203K rehab loan you get all of this in 1 single close solution
- Up to 4 unit properties– You can use the 203K loan to finance properties from 1 to 4 units for both purchases and refinances.
- Down payment as low as 3.5% – Down payments are the same for a regular FHA program as they are or the 203K.
FHA 203K rehab loans are a great alternative to second mortgages, home equity lines and construction financing. Finding an FHA lender who specializes in 203Ks is very important. You do not want to be dealing with someone who just started learning this program. You need a seasoned lender who underwrites these loans in house. AnnieMac has a dedicated Renovation and Construction Lending department to specialize in exactly this.