There are many types of FHA home loans., so it’s very easy to get confused between so many options. One of them is the famous 203b FHA loan.
Perhaps you are looking to buy a house through the HUD (Housing and Urban Development) and it needs a lot of maintenance work.
In this case you could be thinking of a type of FHA home loan: refinance loan option known as 203kwhich is also called FHA rehab loan in some cases. This loan provides money for the purchase and renovation of a house at the same time.
The 203b loan, on the other hand, is essentially the FHA Standard Single Family Home Loan. The official site of the FHA/HUD has a section that explains the how and why of the FHA 203b loan. Below is a summary.
What is the purpose of the 203b FHA loan program?
Provide mortgage insurance for an individual to purchase or refinance a primary residence.
The mortgage loan is financed by a lending institution, such as a mortgage company, bank, or savings and loan association, and the mortgage is insured by HUD.
Who is eligible for 203b FHA loans?
- The borrower must meet the standard credit requirements of the FHA.
- Borrower is eligible for approximately 96.5% financing.
- The borrower can finance the mortgage insurance premium in advance on the mortgage. He will also be responsible for paying an annual premium.
- Eligible properties are structures with one to four dwellings. For example, a duplex house that has apartments with separate entrances for two households.
What about the 203b FHA rehabilitation loan?
According to the FHA Y HUD:
“Section 203k fills a unique and important need for homebuyers. When purchasing a home that needs repair or modernization, buyers often have to go through a complicated and expensive process. Acquisition and improvement interim loans often have relatively high interest rates, short repayment terms, and a balloon payment «.
“However, Section 203k offers a solution that helps both borrowers and lenders by securing a single, long-term, fixed-rate or adjustable-rate loan that covers both the acquisition and rehabilitation of a property. Secured Section 203k loans save borrowers time and money. They also protect the lender by allowing them to secure the loan even before the property’s condition and value can offer adequate security.”
The FHA 203k rehabilitation loan may be what you need if your situation is what was described at the beginning. We recommend you consult with a loan officer to find out what the requirements and benefits of a loan are. FHA 203k according to your current situation.