You may be considering a 203(k) loan to rehab a property. If so, you’ve probably got questions about this method of financing the purchase. Here are five of the most frequently asked questions we hear from our clients:
What is a 203(k) loan?
A 203(k) is a program run by the Federal Housing Authority under the Department of Housing and Urban Development (HUD) that offers families the opportunity to purchase and rehabilitate or repair homes. The amount of the refurbishing is added to the amount of the purchase of the home. The loans are insured by the FHA and offered through various lending institutions.
Can I get a 203(k) loan to purchase property other than a single-family home?
Yes, the 203(k) loans can be used to purchase a dwelling that consists of one to four units. It cannot be used for dwellings larger than four units.
Can an investor apply for a 203(k) loan?
No, only those planning to occupy the property can apply for the loan. It can be used to purchase a dwelling of up to four units, as long as the owner will be occupying one of the units. Non- profit and government agencies can also use the 203(k) loan program.
Can I do the renovation work myself?
Yes, as long as you are qualified to do the work.
Is there a time limit for having the renovations completed?
The time limit for the work to be completed will be part of your contract. Work must start within 30 days of closing, and should be completed by the time stated in your contract.
For more information about 203(k) loans, contact the mortgage experts at Midland Mortgage Corp. today.