The FHA 203k loan is the most underused loan that I have worked with. The FHA 203k loan does not have to be a scary loan. It simply is an FHA loan that allows work to be completed on the property AFTER closing. It is an excellent way for the buyer to buy that perfect home that needs some work and the buyer simply does not have the money to do the work after closing. The FHA 203k loan allows the buyer to finance the work at the closing so the money is available to complete the home after they own the home. The Scott Miller team are experts at the FHA 203k loans in Maple Grove, Andover and Blaine along with the entire state of Minnesota. To understand more about FHA 203k loans call us at 763-567-7218!
What is the difference between a 203k limited and a 203k full
A 203k limited is a loan where the total repair costs will be under $35,000 and there are no structural changes to the property. Some of the repairs that can be done with a 203k limited are:
- replace cabinets
- interior or exterior painting
- improve accessibility for people with disabilities
- add major appliances (dishwashers, free standing ranges, refrigerators, etc)
- lead based paint removal
- minor remodeling (non structural)
- repair or replace existing HVAC systems, heating, plumbing electrical systems
- repair roof, gutters and down spouts
- repair decks patios and porches
- repair septic systems
A 203k full will allow all of the above and allow for the following:
- room additions
- major energy conservation improvements
- floor treatments
- add heating/cooling systems
- move a home
- structural work
- repairs over $35,000
The 203k full is only limited by the FHA loan limits set by the county. To find out more about what can be done with an FHA 203k loan call us at 763-567-7218
Who can qualify for an FHA 203k loan?
Anybody can qualify for an FHA 203k loan. It is an FHA loan that is only limited by the county loan limits and the type of FHA 203k loan will be determined by the type of work to be completed and the amount of money needed to complete the home projects. If you would like to see if you qualify for an FHA 203k loan call us at 763-567-7218.
Does it take longer to purchase a home with an FHA 203 k loan?
This is the most asked question about an FHA 203k loan. The simple answer is there are a few more steps involved. The buyer needs to have a licensed contractor complete the work on the FHA 203k loan. The delays are usually at the beginning of the process. The buyer will find a house, determine the amount of work and what exactly needs to be done. Then the buyer would need to have the contractor of their choosing come out and provide a bid on that work. Once the buyer knows the cost of the repairs, the buyer can make a good decision if they want to make an offer and what is the best offer price to make. After the home is inspected, (we recommend a 203k inspector as he can do the “normal inspection” and the 203k inspection at the same time) the inspector will make sure that FHA will not require additional repairs. If the inspector believes other repairs need to be included, then we will have to add them to the bid. Because there are more people involved with an FHA 203k loan, I would allow for more time to meet the closing date. If you would like to discuss the FHA 203k requirements and closing date timeframes, call us at 763-567-7218.
How exactly does an FHA 203 k loan work?
The steps of the FHA 203k are similar to a traditional FHA loan. The home is picked by the buyer. The contractor provides the bid for the work the buyer wants to be done after closing. The home inspector will make sure that all the repairs required by FHA so the property meets the minimum property standards and any additional work will be added to the contractors bid. If the type of work or the cost of the repairs moves the 203k into a FULL 203k loan, then a 203k Consultant will get involved. The consultant will act as a liason between the buyer and the contractor to insure all the work is done correctly and the correct paperwork is completed. Once these items are complete, the loan follows a traditional FHA loan. We would order the appraisal thru an FHA approved appraiser, the appraiser would have the work to be completed along with the purchase price. Once the appraisal is returned, we would submit the loan for complete loan approval and the loan would close. The money to be used for the construction remodel will be held in escrow by the title company. As the work is completed, the builder, buyer and consultant (if needed) will request a draw. The lender and the title company will complete their inspections and issue the money. Any money left over can be used for additional work or will be added to the principal balance of the loan. The Scott Miller team is an expert at 203k loans in Maple Grove, Andover and Blaine along with the entire state of Minnesota. Call us with questions on how a 203k can help you with your next home purchase 763-567-7218!