James Mitchell

FHA LoanUnless you have an unlimited budget, buying a new house often requires compromise. Sometimes, it may not have enough rooms, is in the wrong neighborhood, or may even require repairs. But whether you are looking to purchase a new house that requires remodeling or an old house that requires extensive renovations, an FHA 203K mortgage loan for that new house for sale in Kansas City can help you.

What Exactly is the FHA 203k Loan?

The 203k loan, also called the fixer-upper loan or the FHA 203k Rehabilitation Mortgage Insurance Program, combines the purchase and renovation, or refinancing and renovation costs in a single loan. The loan amount is a combination of the property’s purchase price as well as the estimated repair costs, including materials and labor. The down payment is often based on the loan’s full amount; but often the monthly mortgage payments are often set at a higher amount to cover all the expenses for renovation.

The 203k loan come in two types: the regular and the streamlined versions. The regular version is for homes that need more significant repairs such as room renovations or additions, or structural changes that would put you out of your home during the construction process. You’d need to present architectural plans for this and be open for lender inspections.

The streamlined version, on the other hand, is for properties that don’t require any structural changes. Although there’s no minimum limit for renovation work that should be done, the loan amount for repairs is only up to $35,000.

Repair work must commence within 30 days of closing the loan and must be completed no later than six months. In general, the FHA allows almost all kinds of repair work, except luxury additions such as swimming pools and hot spa baths.

Is the FHA 203k Loan Right for You?

While getting an FHA 203k loan might seem complex, if you don’t have enough equity in your home or not enough cash reserves, you must consider it. Just make certain that you go with a mortgage lender and contractor with ample experience in FHA 203k loans to avoid running into complications. You’ll never know, a few months from now and you’ll finally be enjoying a gourmet meal in your brand-new kitchen.

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