FHA 203k Loans

The FHA 203K is a loan available to buyers of homes that are in need of repair. One single loan is given to the buyer that will cover both the purchase price and the proposed improvements. The maximum loan amount is determined by the value after the improvements. The cost of improvements made to the home must be a minimum of $5,000 and may not exceed $35,000. The repairs are made by a licensed contractor after the loan has closed, and will receive payment upon completion.

Like a regular FHA purchase, the 203K loan is also insured by the Federal Housing Association. As of January 1, 2009 there is a minimum down payment of 3.5% of the purchase price. With the 203K loan, it is allowable for the seller of the property to contribute up to 6% of the purchase price towards the buyers closing costs.

The FHA 203K loan is a great option for those who need a low down payment, help with closing costs and help fixing up their new home.