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What is an FHA 203(k) Loan?

April 26, 2017FHA k loan

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What is an FHA 203(k) Loan?

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An FHA 203(k) loan is basically the same as a regular FHA [called a 203(b)], but with a twist. An FHA 203(k) loan permits homebuyers to finance repair/improvement money into their mortgage to repair, improve or upgrade their home. With this loan option, homebuyers can quickly and easily tap into cash to pay for property repairs or improvements, such as those identified by a home inspector or FHA appraiser or homebuyer preferences, such as energy efficient improvements, replacement of existing counter tops, appliances, floor coverings, etc. There are two types of FHA 203(k) Loans: Standard/Rehab (minimum $5,000 up to 110% of the improved appraised value) & the Streamline (work is less than $35,000…up to 110% of the improved appraised value). Because the FHA 203(k) Rehab loan is more like a construction loan, the most common version is the FHA Streamline 203(k) Loan.