FHA 203K 'Fixer-Upper' Mortgage

Add up to $35,000 to your loan to repair, improve, or upgrade your home.

 

The FHA 203(k) 'Fixer-Upper' Loan is a government-backed mortgage designed to help homebuyers purchase and renovate a fixer-upper with a single loan. Offered by the Federal Housing Administration (FHA), this loan is ideal for buyers looking to invest in a property that needs repairs or modernization but may not qualify for traditional financing. One of the biggest advantages of the FHA 203(k) Loan is that it combines the purchase price and renovation costs into one mortgage. Instead of taking out separate loans for the home purchase and renovations, buyers can finance the total amount with a low down payment - typically as little as 3.5%. This makes it an attractive option for first-time buyers or those with limited savings. There are two types of FHA 203(k) loans: Standard and Limited. The Standard 203(k) is for major renovations, such as structural repairs or room additions, requiring a minimum of $5,000 in work. The Limited 203(k) is for minor repairs, like flooring or kitchen updates, with a cap of $35,000. This loan is a great way to turn a distressed property into a dream home, making homeownership more accessible while revitalizing neighborhoods in the process..

Some of these features include:

  • Increased Home Value - Renovations increase the home's value, providing future equity

  • Competitive Interest Rates - Often lower than conventional loan rates, reducing monthly payments.

  • Low Down-Payment Programs

  • Family Gifts can be used as the down-payment

  • Multiple Property Types Allowed - Can be used for single-family homes, condos, and some multi-unit properties

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  • Energy-efficient mortgage FHA Loan Program that allows borrowers to combine the cost of energy-efficient upgrades into their FHA Loan loan upfront

  • FHA Flexible Debt-to-Income Ratios - Higher DTI ratios accepted compared to conventional loans

  • Government-Backed Security -  FHA insurance reduces risk, increasing loan approval chances

 

The important step in purchasing a new home is to get an FHA Pre-Approval Letter for a home loan. The peace of mind that comes with knowing that your mortgage loan has been approved will allow you to shop for your new home with confidence. And when you are ready to make an offer, the fact that you have already been pre-approved for your loan amount will give the seller confidence in you as a buyer.

FHA 203k Loan Program