FHA 203K Loan

By
Real Estate Agent with The Real Estate Group

The FHA 203k loan is designed to help build neighborhood revitalization by helping individuals finance the repair and upgrade of their home.  To qualify, the structure must be a single-family house, more than a year old with one to four bedrooms.  Contact a FHA-approved lender for additional information and qualifications.

First, an energy audit must be completed by a qualified professional, who has been approved by the lender.  Based on the audit report, the homebuyer can choose which improvements to make.  However, installation of smoke detectors and upgrading the heating and cooling system to a more efficicent level may also be required.

Second, get bids for the work and establish a firm price with the contractors.  The lender will add the amount to the loan.

Third, when closing is completed, the lender sets up an escrow account for the money to be disbursed to the contractor when all work is completed.  The mortgage payment may be slightly higher, but the energy savings from the improvements usually offsets the difference.

 

 

Comments (2)

Rick Irving
My Texas Home Real Estate - Fort Worth, TX
Rick Irving Knows Real Estate

Joy, Thanks for the information. The 203K loan is a good way to get into a home and have the needed repairs done too. They are a little extra work but it can be worth the trouble.

Jul 14, 2010 05:26 AM
Carol Zingone
Berkshire Hathaway Home Services Florida Network Realty - Jacksonville Beach, FL
Global Realtor in Jax Beach, FL - ABR, CRS, CIPS

I have not had a  buyer use a 203K loan yet, but am looking forward to it, as these loans can help reduce some dated inventory on the market, and help the buyers make the changes they want or need to.

Jul 19, 2010 01:07 AM