Michigan Fha 203k Loan.

What is the FHA 203K Renovation Mortgage Loan?

Michigan’s FHA 203K loan program is gaining popularity among homebuyers. Also known as the “FHA rehab loan”, this mortgage program allows for a minimal out-of-pocket investment into a property. It allows the homebuyer to finance repair costs, appliances and other home improvements into their mortgage with one monthly payment.

Logistically speaking, a homebuyer, after agreeing to purchase a home for a set price, attains quotes from contractors to have renovations done. An appraisal of the home is then done, taking into account the home’s value once renovations have been completed. You can then borrow up to 96.5% of that appraised value. As soon as closing takes place, funds for renovations are placed in an interest-bearing escrow account and construction begins. Once renovations are complete, a final inspection takes place, the contractors are paid out of the escrow, and you move in to your beautifully renovated new home!

For more information on FHA 203k Mortgage Loan programs from Riverbank, call us at 800-555-2098 or apply online today!

Why choose the FHA 203K Renovation Mortgage Loan?

Many banks will simply deny a loan if the subject property is not in perfect condition, but that is not the case with the FHA 203K loan program. Do not walk away from your potential dream home over fear of renovations and a little extra paperwork. The FHA 203K mortgage loan program allows you to finance up to $35,000 in repairs under the Streamline program, and more under the standard program. The standard program allows for a renovation budget of up to 50% of the completed value of the home.

FHA 203(k) vs Homestyle Renovation Loans

The two most well-known renovation loan programs are the FHA 203(k) and Homestyle Renovation programs. 203(k) is an FHA program, while Homestyle Renovation is a Conventional program. Each renovation loan, therefore, must follow the requirements and guidelines of its parent program.

Some of the standout benefits of the FHA 203(k) program include a low 3.5% down payment, a shorter wait time after bankruptcy or foreclosure, acceptance of lower credit scores, lower interest rates, higher allowable debt-to-income ratio (DTI), and ability to replace freestanding appliances.

Eligible FHA 203K Home Repairs

The homebuyer can use the FHA 203(k) program to finance repairs of anything from painting, to deck replacement, to room additions. Improvements and upgrades can be made, even if the home does not necessarily need them to be livable. All health, safety and energy conservation items must be addressed first, prior to completing general home improvements and upgrades. See below for an example list of upgrades homebuyers have made using the FHA 203(k) mortgage loan program:

  • Structural alterations and additions (with upfront approval)
  • Upgrade central air/heat, and electrical systems
  • Repair termite or moisture damage
  • Remodeled kitchen and baths, modernize plumbing
  • Install or repair well or septic systems
  • Repair or Replace roofing, gutters, downspouts
  • Interior and exterior painting
  • Flooring, tiling and carpeting, interior / exterior painting
  • Energy conservation improvements
  • Major landscaping projects
  • Improvements for disability accessibility
  • New free standing appliances
  • Foundation repairs
  • Other improvements that are a PERMANENT part of the real estate*

*Luxury items are not permitted to be included in the financing.

For more information please view the FHA 203k Mortgage Worksheet.

FHA 203K Mortgage Loan Requirements

  • Minimum credit score of 600
  • Minimum 3.5% down payment
  • Property must meet eligibility requirements
  • Borrower must meet all other FHA program requirements

Eligible Property Types for a FHA 203k Loan

To be eligible, the subject property must be a 1-2 family dwelling that has been completed for at least one year. The number of units on the site must be acceptable according to the provisions of local zoning requirements. All newly constructed units must be attached to the existing dwelling. Cooperative units are not eligible.

In addition to typical home rehabilitation projects, this program can be used to convert a single family dwelling to a multi-unit dwelling. Alternatively, an existing multi-unit dwelling could be converted to a single family home. See below for a full list of eligible property types:

  • Owner Occupied Properties (1-2 Units)
  • Single Family Residence
  • Manufactured Homes (where rehab does not affect structual components)
  • FHA Approved Condominiums
  • PUD's and Site Condominiums
  • REO, Short Sale, Foreclosure Properties

How can I use the FHA 203k Loan?

The FHA 203(k) loan is a unique mortgage option that can be used for both home purchases and refinances. Whether you are looking to purchase your next home or to renovate your current home, this may be the right loan program for you.

FHA 203(k) mortgage loan uses include:

  • To purchase a dwelling and the land on which the dwelling is located and rehabilitate it.
  • To purchase a dwelling on another site, move it onto a new foundation on the mortgaged property and rehabilitate it.
  • To refinance existing liens secured against the subject property and rehabilitate such a dwelling.

FHA 203K Mortgage Loan Rates

Mortgage rates are very competitive for this loan program. To get an exact rate quote for your situation, speak with a Riverbank Finance loan officer. FHA loans, in general, are less credit driven than Conventional loans, therefore, if you have a lower credit score, the FHA 203(k) mortgage loan program would be a great solution for you and your mortgage needs.

Apply for the FHA 203K Mortgage Loan

To apply for a FHA 203K renovation mortgage the first step is to request information below or speak with a Mortgage Loan officer at 800-555-2098.

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