Sometimes, the home that best suits your wants and needs may not be suitable for your financing if you are using an FHA loan. FHA has a pretty stringent set of rules for property condition, so many home buyers assume that they can’t buy a fixer upper.
That’s not true.
Using an FHA 203(k) loan can be your solution to purchase that diamond in the rough you have your eye on.
What is a FHA 203(k) loan?
The FHA 203(k) loan is designed to allow you to roll your purchase price and the cost of renovations into one mortgage, as long as the cost of renovations exceed $5,000 and the value of the home after rehab still falls within FHA loan limits.
What are the loan limits?
As of November, 2014, the New Orleans metro FHA loan limits are as follows:
$271,050 Single Family
$419,425 3 plexes
$521,250 4 plexes
What types of renovations can be done?
The types of improvements that borrowers may make using Section 203(k) financing include:
•structural alterations and reconstruction
•modernization and improvements to the home’s function
•elimination of health and safety hazards
•changes that improve appearance and eliminate obsolescence
•reconditioning or replacing plumbing; installing a well and/or septic system
•adding or replacing roofing, gutters, and downspouts
•adding or replacing floors and/or floor treatments
•major landscape work and site improvements
•enhancing accessibility for a disabled person
•making energy conservation improvements
What else do I need to know about FHA 203k loans?
All FHA loans require you to occupy the property, so this program is not intended for investors or for second or vacation homes.
Need some assistance getting started with the home buying process? We are happy to help! Call us at 504-327-5303 today.