The Federal Housing Administration (FHA) administers various single family mortgage insurance programs operated through FHA-approved lending institutions which submit applications to have the property appraised and have the buyer’s credit approved. These approved lenders fund loans which the Department insures.
The Section 203(k) program is FHA’s arm for the rehabilitation and repair of single family residential properties.
Most mortgage financing plans provide only permanent financing as long as the condition and value of the property provide adequate loan collateral. In cases where rehabilitation is needed on a property, this normally means that a lender usually will require the improvements to be finished before a mortgage is closed and possession is past to the new owner.
When a homebuyer wants to purchase a house in need of repair or and home that needs updating, the buyer usually has to finance the home first with additional financing to do the rehabilitation or remodel, and then finally a permanent mortgage when the work is completed. Section 203(k) was designed to address this situation.
The borrower can get just one mortgage loan to finance both the acquisition and the rehabilitation of the property. To provide funds for the remodel, the mortgage amount is based on the projected value of the property with the work completed.
According to FHA, this program can be used to accomplish rehabilitation and/or improvement of an existing one-to-four unit dwelling in one of three ways:
| 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 indebtedness and rehabilitate such a dwelling. |
Other guidelines state that in order to purchase a dwelling and the land on which the dwelling is located and rehabilitate it, and to refinance existing indebtedness and rehabilitate such a dwelling, the mortgage must be a first lien on the property and the loan proceeds (other than rehabilitation funds) must be available before the rehabilitation begins.
- For more information on Section 203(k) FHA loans please click the link to be directed to HUD.If you are looking to purchase a home in the Greater Athens area, please feel free to use this link to Search the Athens MLS! While on the Georgia MLS you can search for homes, create a User account to save favorite property searches, email property searches to friends and family, or request more information!
My favorite loan on the market. I have a lot more detailed info on my website and also on my ActiveRain blog.
The way pricing is right now you really want to stay to the streamline 203K if you want a good rate and a quick close.