Renovating and worried that funds would run out soon? AN FHA 203(k) loan may be the best option that you can have if you are stuck with renovating or even purchasing your primary residence. The government insures FHA loans, and because of that, qualifying can be easier than traditional loan packages.
Renovation or even refinancing your home can be included in your FHA 203(k) loan to cover the purchase cost or home improvements. FHA 203(k) loan offers you exceptional affordability, especially if your property is in a high-cost area.
There are two kinds of FHA 203(k) loans – limited and standard. Limited and standard 203(k) loans offer loans for home renovations, but it depends on how you spend the money. The 203(k) standard loan upgrades must not be less than $5,000, and major repairs are allowed. On the other hand, major structural repairs aren’t acceptable for a 203(k) limited loan, and it can give you as high as $35,000 for your renovation projects. Luxurious projects like building outdoor dining, a kitchen, or a swimming pool, are usually not eligibility candidates. Here are some of the projects that are eligible for a 203(k) loan:
- Plumbing and sewer system rehabilitation
- Installation of gutter, downspouts, and roof repair
- Flooring replacement
- Improvement in accessibility for a person with a disability
- Elimination of health and safety hazards
- Improving the home’s energy efficiency
- Landscaping and functionality improvement
Usually, an FHA appraiser must approve the project with a 203(k) loan approval, which a licensed contractor generally completes. It is also not uncommon for a HUD consultant to be part of the project. There will be paperwork that needs to be done, so talk to a contractor as soon as possible. It will be to your benefit if your chosen contractor has had any experience in projects paid for by an FHA 203(k) loan, as the project needs to be finished in a six-month time frame.
