In today's economic climate of bank owned homes, foreclosures, and HUD properties, which are in such disrepair located in some of the nicest neighborhoods and housing divisions comes a sigh of relief for those homebuyers who want to purchase a home for less than the market value and doesn't mind having a contractor rebuild their new dream home.  This loan program for homebuyers is not new at all. It has been around for some time.  It is called the FHA 203k. 

The 203k or "rehab" loan has 2 parts to the program.  The first part is the mortgage loan and the second part is the construction/rehab loan. Do not be confused if this is 2 separate loans. It is not. It is actually 1 loan with 1 closing.  The 203k has 2 loan programs which is based on the construction/rehab costs.  The first loan program is called the "Streamline 203k" and the second is the "Full 203k".  There are a couple of differences between the 2 loans. The first difference is the "Streamline" requires the construction/rehab project to be less or equal to $35,000 and the "Full" to be above $35,000.  The second difference is the "Streamline" does not require a 203k Home Inspector consultant. It only requires estimates from a licensed contractor, who will be doing the work. The "Full" requires a certified 203k consultant/Home Inspector.  The third difference is the "Streamline" only requires a 1x inspection once the work is completed to pay the contractor the remainder of the balance due for work performed.  The "Full" requires an inspection throughout the process depending on the schedule the contractor sees fit. After each inspection the contractor gets paid. The final payment is given after the final inspection.  If you are looking to make the home more energy efficient the homebuyer or owner can allocate funds for that specific project.

The 203k is a government-sponsored loan in the FHA family.  This means that rates will remain low compared if the borrower would obtain a construction loan and would have 2 settlements.  One for the  construction loan and then the settlement for the actual mortgage.  For the 203k there is 1 settlement.

To apply for the 203k loans click here  Apply Now