What is a The Section 203(k) Rehab loan?
• Section 203(k) program is used to rehabilitate properties. Section 203(k) financing parameters are used to assist borrowers manage the rehabilitation processing. • The Section 203(k) program was designed to address the situation where a Borrower wants to purchase a house in need of repair or modernization. The Borrower usually has to obtain financing first to purchase the dwelling; additional financing to do the rehabilitation construction; and a permanent mortgage when the work is completed to pay off the interim loans with a permanent mortgage. The Borrower can get just one mortgage loan, at a long-term fixed (or adjustable) rate, to finance both the acquisition and the rehabilitation of the property. To provide funds for the rehabilitation, the mortgage amount is based on the projected value of the property with the work completed, taking into account the cost of the work. To minimize the risk to the mortgage lender, the mortgage loan (the maximum allowable amount) is eligible for
