The Federal Housing Administration (FHA) administers the FHA 203(k) loan program, which makes it possible for buyers to purchase a property with the cost of repairs and improvements included in the loan. Since the program was designed to finance renovations and help revitalize neighborhoods, the required down payment may be as low as 3.5 percent of the total cost.
In addition to low down payments, the eligibility terms of an FHA 203(k) loan are more flexible. In general to be eligible for an FHA 203(k) loan, you must have a credit score of at least 620. Unlike other loans, you do not need to be a first-time homebuyer in order to be eligible. If the renovation is extensive and you cannot live in the home during construction, up to six months of mortgage payments may be included in the FHA 203(k) loan, so you can avoid making double housing payments while living outside of the home.
Although some restrictions and special rules apply, 203(k) loans can be used to purchase and refurbish condos1, two-to-four unit properties, and mixed-use properties2, in addition to single-family residences and homes in planned unit developments. As a top 203(k) lender in the market, HomeBridge can lend you the maximum amount under a 203(k) loan, which is 96.5 percent of the after-improved value*. For refinancing, the maximum loan amount is 97.75 percent of the after-improved value**. To check the current loan limits by county, visit http://entp.hud.gov or check with your Mortgage Loan Originator for the current limits.