203k Rehab Mortgage Loan

The 203(k) rehab loan fills a unique and important need for homebuyers. When buying a house that needs repair or modernization, homebuyers usually have to follow a complicated and costly process. Interim acquisition and improvement home loans often have relatively high interest rates, short repayment terms and balloon payments. The FHA 203(k) rehab loan offers a solution that helps borrowers cover both the acquisition and rehabilitation of a property. Section 203(k) insured loans may save qualified borrowers time and money.

For less extensive repairs/improvements (less than $35,000 in repairs), we recommend the FHA 203k streamline loan.

The 203(k) rehab loan will cover the purchase or refinancing and rehabilitation of a home that is at least a year old. A portion of the loan proceeds is used to pay the seller, or in the case of a refinance, to pay off the existing mortgage. The remaining funds are placed in an escrow account and released as rehabilitation is completed. The cost of the rehabilitation must be at least $5,000, but the total value of the property must still fall within the FHA streamline mortgage limit for the area.

Drew Mortgage Associates is not affiliated with the Federal Housing Administration (FHA).

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