The FHA 203(k) program allows the homeowner to refinance the current mortgage, while also getting funds necessary to rehabilitate or upgrade the property. Most lenders will not allow financing for a home unless the condition and value of the property provide adequate loan security. When rehabilitation is required, that usually means that the lender will require the improvements be completed prior to a long term mortgage being made.
To be eligible, the property must be a 1-4 unit dwelling that has been completed for at least one year. Homes that have been demolished are eligible if some of the existing foundation remains in place. In addition to typical rehabilitation projects, the 203(k) loan program can be used to convert a one unit property to a two, three, or four family unit.
A 203(k) loan can also be used for a mixed-use property under certain criteria. The property must not have greater than 25% (for a one story building), 33% (for a three story building), and 49% (for a two story building) of its floor area used for commercial purposes. The commercial use of the property also must not affect the health and safety of the occupants, and the rehabilitation funds must only be used for repairs and upgrades to the residential functions of the property.
A condominium may also be rehabilitated utilizing a 203(k) loan. Only the interior of the condo unit may be rehabilitated. Also, only the lesser of 25% or 5 units may be undergoing rehabilitation at the time of the 203(k) loan.
Luxury items and improvements that are not a permanent part of the property are not allowable under the 203(k) loan program. However, the homeowner can use the program to finance such items as painting, room additions, decks, and even other items that do not need any other improvements. All health and safety items must be addressed prior to completing all general home improvements.
This FHA insured mortgage program, called the “Streamlined 203k” Limited Repair Program permits homebuyers to finance up to an additional $35,000 of repairs into their mortgage to purchase and improve or upgrade the home before move-in or to refinance an existing mortgage and add up to $35,000 in repairs or improvements. With this new product, homebuyers can quickly and easily tap into cash to pay for property repairs or improvements, such as those identified by a home inspector or FHA appraiser. Unlike the standard 203(k) program, any FHA approved lender may originate a Streamlined 203k mortgage.
Why should you choose an FHA home loan?
There are many good reasons to choose an FHA loan, especially if one or more of the following apply to you:
- If you’re a first-time homebuyer
- If you don’t have a lot of money to put down on a house
- If you want to keep your monthly payments as low as possible
- If you’re worried about your monthly payments going up
- If you’re worried about qualifying for a loan
- If you don’t have perfect credit
- If you’re worried about what will happen if you fall behind on your payments
If any of these things describe you, then an FHA loan may be right for you. An FHA-insured loan offers many benefits and protections that you won’t find in other loans including:
Lower rates: An FHA loan has competitive interest rates because the Federal government insures the loans for lenders. Always compare an FHA loan with other loan types.
Easier to qualify: Because FHA insures your mortgage, lenders may be more willing to give you loan terms that make it easier for you to qualify.
If you have less than perfect credit: You don’t have to have perfect credit to get an FHA mortgage. In fact, even if you have had credit problems, such as a bankruptcy, it’s easier for you to qualify for an FHA loan than a conventional loan.
More protection to keep your home: The FHA has been around since 1934 and will continue to be here to protect you. Should you encounter hard times after buying your home, the FHA has many options to help you keep you in your home and avoid foreclosure.
FHA does not give money to people for a home and it does not set the interest rates on mortgages it insures. FHA insures loans for lenders against defaults. For the best interest rate and terms on a mortgage, you should compare mortgages from several different lenders. An FHA-approved lender can help you start the loan application process.
You may use an FHA-insured mortgage to purchase or refinance a new or existing 1-4 family home, a condominium unit or a manufactured or mobile home (provided it is on a permanent foundation).
USDA Home Loan Program
What is a USDA Loan?
A USDA Guaranteed Loan is Government insured 100% purchase loan. These Loans are only offered in rural area’s and serviced by direct lenders that meet federal guideline’s.
Under the Guaranteed Loan program, the Housing and Community Facilities Programs guarantees loans made by private sector lenders. (A loan guarantee through HCFP means that, should the individual borrower default on the loan, HCFP will pay the private financier for the loan.) The individual works with the
private lender and makes his or her payments to that lender.
Under the terms of the program, an individual or family may borrow up to 100% of the appraised value of the home, which eliminates the need for a down payment. Since a common barrier to owning a home for many low-income people is the lack of funds to make a down payment, the availability of the loan guarantees from HCFP makes the reality of owning a home available to a much larger percentage of Americans.
A VA Mortgage for the home you buy
Buying a home is one of the biggest and most important decisions you will ever make. We understand that and want to make the process as easy as possible. Whether you are a first-time homebuyer or are experienced with the process, we’re here to make your home buying journey a great one.
Since 1944, when home loan guarantees were part of the original GI Bill, the VA has guaranteed more than 18 million home loans worth over $911 billion. In 2008, 180,000 veterans, active duty servicemembers, and survivors of veterans received VA home loan valued at about $36 billion. More than 90 percent of those VA loans were no-down payment loans.
The VA Home Loan program allows veterans with qualifying income and credit to purchase a primary residence without putting any money down towards the sale price of the home, as long as that sale price does not exceed the appraised value of the home. Veterans do need money towards closing costs as well as earnest money, which the seller generally requires when a sales contract is signed. Closing costs may be paid by the seller, which can be negotiated when the sale price of the home is set.