What Is A 203k Home Loan?

If you plan on buying a fixer upper house, then a 203k loan may be the right choice for you. Traditional loans may not give you enough money to cover the repairs that are needed for your home.

There are two different types of 203k loans. One is a standard option that will cover structural repairs, standard remodeling, and landscaping. A limited 203k loan can be used for energy conservation upgrades, such as new appliances or roofing. The 203k loans can also cover bathroom and kitchen remodels, patios, plumbing, flooring, heating and air systems and more. While these loans do cover a number of improvements that can be made to your home, these loans won't cover things that are considered “luxury,” like a pool or a tennis court.

The maximum amount you can borrow will depend on what type of 203k loans you are receiving, but with a standard loan, the minimum you can borrow is $5,000.

The home you plan on buying will still have to qualify based on FHA guidelines, but some homes that qualify are homes that are torn down but still have an existing foundation in place, a home that you want to move to a new location and a single family home that has been completed for at least a year. The value of the home won’t be able to exceed a certain amount, which will depend on the area where you live.

Usually, these loans have low down payments, but interest rates will vary based on the lender just like a traditional loan.

If you need to be referrred to a 203k home loan lender or want to learn more about your home remodeling, contact the expert team at Detroit Build today.