203(k) Loan Program
FHA’s 203(k) loan program is designed to finance the purchase and renovation of your home, all in one loan.
What is a 203(k) Loan?
The FHA 203(k) loan lets you purchase or refinance and rehabilitate a property with one loan closing. The projected rehabilitation costs are held in an escrow account and disbursed as work is completed and inspected. The loan amount is based on the lower of the projected market value following repairs or purchase price plus renovation costs.
Benefits of a 203(k)
- 203(k) loans are designed to improve, update and modernize the home.
- The loan enables you to purchase foreclosure properties that require repairs.
- You can purchase a home that does not require repairs and finance the cost of “modernization” or cosmetic repairs.
- The loan allows for 1-4 unit dwellings, including condominiums.
Where zoning allows, a 203(k) loan can be used to convert a single family dwelling to 2-4 units and vice versa.
Up to six months of PITI (principal, interest, tax and insurance) payments can be financed to assist those who would otherwise be required to make double-housing payments. Consultant will determine the number of months house will be uninhabitable for financing of payments.
Buyers who purchased a property with cash can use the 203(k) program to complete repairs/ modernization and replenish funds used at the time of purchase. Mortgage must close within 6 months of cash purchase.
The loan can be used for complete reconstruction of a home on its original foundation.
Properties in “below-average” condition can be upgraded through repairs and maintenance (i.e., new roof, fix broken windows, and lead paint abatement). Increase square footage by building an addition, building a second floor or finishing a basement or attic space.
Is a 203(k) loan right for me?
- A minimum down payment of 3.5%
- A credit score of 640 or higher
- You currently have no other FHA loans
- You DO NOT have to be a first-time buyer
Omega Financial Services, Inc NMLS #20169 Licensed Mortgage Banker by the NJ Department of Banking and Insurance, the PA Department of Banking and Securities, the CT Department of Banking and The New York Department of Financial Services.
1872 Morris Avenue
Union NJ, 07083