Purchasing a home that requires renovations and fixes can be a rewarding and financially advantageous situation for many prospective home buyers. Unfortunately, getting financing for a fixer-upper is much more difficult as standard mortgages won’t cover home improvements, and most lenders won’t approve a loan until the requisite fixes have already been made.
Luckily, the 203(k) mortgage program was created to aid home buyers when purchasing homes that need repairs and renovations. Similar to a standard FHA mortgage, borrowers can take advantage of down payments as low as 3.5% with excellent interest rates. The 203(k) mortgage program not only makes it easier for home buyers to get the house they always wanted, it also encourages urban renewal and renovation of historic homes and neighborhoods.
Loan One 203(k) Loan Program Overview
Loan One 203(k) loans are set up to borrow against the future value of your home after necessary renovations have been made. This allows you to make all relevant repairs both large and small. Many homeowners use the 203(k) loan to repair a roof, fix structural problems, or even purchase appliances. There are two varieties of 203(k) loans.
Streamlined 203K Loan
The streamlined 203(k) loan has no minimum value, but can’t be used if repairs and renovations cost more than $35,000. The streamlined 203(k) loan is designed for simple home repairs that don’t require engineers or architects to assist in the renovation. The streamlined 203(k) loan can’t be used on major construction projects such as adding new rooms, landscaping projects, structural work, or any work requiring a project schedule longer than six months.
Standard 203(k) Loan
The standard 203(k) loan program requires a minimum investment of $5,000.00 in repairs, but is not capped or restricted on the type of improvements which can be made.