FHA 203k loans are designed for people that are looking to renovate their home or want to upgrade their current living space. This could be due to natural disasters like the most recent hurricane Harvey that has led to families becoming stranded. FHA 203k loans are one of the easiest and most affordable disaster relief loans available to victims of natural disasters and are sometimes used in place of 203h loans for flood victims.
The relative affordability and ease of this loan program, which are similar features with FHA 203h home loans are unique to catastrophe affected properties. This applies in particular when the loan program is compared to conventional mortgage loan programs. An FHA 203k loan is one of the FHA home loans that help to remove the guesswork from renovating or even purchasing a home. As opposed to some years back when homebuyers are required to apply for multiple loans to buy a fixer-upper, the FHA 203k loan comprises of different loan programs in one.
It is no news that one-to-four family dwellings that are solely being used for residential purposes are eligible for the mortgage loan. However, you might also be wondering what it requires to qualify for the loan as an individual. What are the minimum credit scores, if any? Can first-time homebuyers apply for the loan? How much cash should applicants have saved up?
As a disaster victim, many things going through your mind, and you are probably concerned about the maximum loan amount or your credit score. Well, you might want to take things easy and check out some of the requirements that ensure your eligibility for a 203k loan or the other FHA disaster loan, the Section 203(h). It is worth noting that you need to contact your FHA-approved lending institution for more information on issues that are unclear.
Credit Scores
One of the most important requirements that determine one’s eligibility for a loan whether it is a home or car loan is the applicant’s credit score. Lending institutions would usually consider your credit before granting a loan. Fortunately, persons applying for FHA-insured loans have a somewhat more lenient credit score requirement. It gets even easier for victims of natural disasters as their circumstance is usually put into consideration when looking at their credit score.
Currently, the minimum FICO score required to be eligible for an FHA 203k loan is 620 and a 3.5 percent down payment. However, applicants with less than 620 FICO score can also qualify for the home loan if they meet additional requirements.
First-Time Homebuyers
A first-time homebuyer is someone that has not owned a home in the past couple years, three years to be precise. Such persons have several loan options available to them, and these include the FHA 203(k) loan program.
203k loan programs are ideal for first-time homebuyers for financing a home purchase. However, these loan programs are not limited to this class of individuals. The primary requirement is for you to live in or plan to live in the home you intend purchasing. This is important whether or not you once owned a home. This applies in particular if you are a victim of hurricane Harvey or any other natural disaster.
FHA loans are designed to help everyone, and anyone acquire their dream home. However, the loans are described as first-time homebuyer program for several reasons. One of such reasons is the minimum down payment required to be eligible for the loan. This makes the FHA 203k loan a perfect option for disaster victims.
FHA Limited K and Standard Consultant K Home Loans
There are usually two basic categories of 203k loans available to homebuyers –the Limited K Loan and the Standard Consultant K Loan. The most suitable loan type depends on the depth and severity of the home renovations.
The Limited K loan is designed for homes that require repairs and updates that cost less than $35,000. This makes it perfect for homes that still have their foundation intact. On the other hand, the consultant K is for homes that need repairs that cost more than $35,000.
Regardless of your preferred or most suitable loan type, it is advised that you contact a FHA-approved lender near you. This ensures that you get the necessary information needed to make an informed decision and you can distinguish between the two types of 203k loan programs or any other mortgage for disaster-affected homeowners.
If you are a victim of hurricane Harvey, 203k loans are one option you want to consider. They are not just Houston rehab loans but are loans designed to ensure your swift recovery.