The FHA 203 K Home Construction Or Remodel Loan
Yes, the FHA 203 K is a home construction and rehab/ remodel home loan. There are pro's and cons to getting this construction loan and a great loan officer is of course key to getting the most current information. We can certainly connect you with one.
The FHA 203 K is mortgage insurance. Basically these construction loans are insured by the Fair Housing Administration and you pay for that insurance. Yes you can get a construction, rehab or remodeling loan with the 3.5% down which FHA loans are famous for. If you already own the land and have established equity in the land that equity can/ may count toward your 3.5% down.
The list below are just snippets of the pros and cons of these construction loans. They may change or over time and some are going to be lender specific. However they are excellent for learning just enough to start your conversation with a mortgage loan officer. They will help clarify some things in advance.
- This is a one time closing loan. Funds are issued and approved drafts may be taken as they are approved by the FHA Inspector who will come and view the homes progress. You can pay more and have the inspector come more often which may or may not be right for your situation. Otherwise it may take up to two weeks or more the the builder to get paid when the builder requests those periodic draws.
- The building contractor that you choose must be approved by the mortgage lender. The contractor will also have to fill out all of the FHA forms required of the contractor.
- The cost of the lot, plans permits and possibly even your housing may be covered by the loan.
- Some of the items expected of you are 2 years of work history, you must be planning on the residence to be your permanent residence and the lender will probably expect your credit score to be higher than the minimum acceptable to the FHA. The FHA does not issue loans they are the insurer. You will also most likely need to have any Chapter 7 bankruptcy more than 2 years behind you.
- Believe it or not you can also use this type of loan on multi family dwellings (ask your loan officer for limitations). You must occupy one of the dwellings as your permanent residence.
All loans are complicated. So are these which is why we reach out to professionals to get more information about them. This type of loan can be awesome but of course has it's weaker points as well. It may or may not be right for you. Get with a professional who asks you questions to help guide you to the best options to choose from. Thank you for reading this post about the The FHA 203 K Home Construction Loan
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Stellar MLS (updated 11/29/23 11:59 PM) |