Did you know that there are loan programs that allow you to finance repairs or updates to a home that you want to purchase or refinance? This is great for buyers who are considering a property that will need some work but they don’t have the cash on hand for the updates. But this is also for home owners that want to make improvements to their current home. The loan amount is based upon what the property will be worth, AFTER it is improved.
What can you do with with this program?
- Changes for improved function and modernization
- Changes for aesthetic appeal
- Plumbing, heating, AC and electrical work
- Well and/or septic repairs
- Roofing, gutters and down spouts
- Flooring, tiling and carpeting
- Upgrades of all kinds (kitchens, baths, etc)
- Energy conservation improvements
- Landscaping and site improvement
- Access for disabled
How does this process work if you are buying a home?
Well, before you make an offer on a property you will need to bring your contractor(s) to the property so that they can provide a detailed estimate of the work you would like done. Then speak with your lender and have them help you structure your offer to the seller. Once your offer is accepted, the closing process will move forward. After settlement, you have six months to have the work completed. Your lender will walk you through the entire construction process.
You can qualify if you are the owner occupant and you are purchasing or refinancing. Investors cannot use this program. You can use this loan on single family dwellings, limited condo and townhouses and 2-4 unit buildings. Note that unfinished new construction properties are not eligible.
What type of loan is a 203K?
It is a fixed rate loan and is available with 15 or 30 year terms. These loan rates are generally about 0.5% higher than a conventional loan rate. You will also need to be able to put down approximately 3.5% down, based on the total cost of the acquisition and the renovation.
What are the Loan Limits?
- $625,500- 1 unit
- $800,775 – 2 units
- $967,950 – 3 units
- $1,202,925 – 4 units
Talk with your lender about your options with this loan program. It may open up opportunities that you didn’t know you had!