Want to limit your risk as a first time buyer while you buy a home in need of repairs? Down Payment requirements on the popular FHA 203K program have dropped to just 1.5% from select DC/MD/VA loan providers. Banks are giving a 2% grant that brings your Down Payment from 3.5% down to just 1.5%. We do not know how long the promotion will last. Get started below.
“We use this program quite with our home buying clientele,” said Gerard DiRuggiero, Principal Broker. “You get to save your cash as a buyer and roll all the renovation funds right into the mortgage. The fact that this is now just 1.5% Down means that local banks want and value this type of business in a big way.”
With the FHA 203(k) Renovation Loan, you can purchase your primary home and renovate it — all with one convenient loan. This loan lets a buyer finance the cost of improvements into the purchase or refinance of the home, meaning you have one monthly payment that includes your mortgage and repair costs. The FHA 203k supports the following types of situations:
- Purchasing a fixer-upper home in need of upgrades, repairs or larger renovation projects from a traditional home seller, even if the homes is being sold “as is.”
- Purchasing an up to 4 unit property in need of upgrades or repairs. You must live in one of the units as your primary residence.
- Buying a foreclosed property from banks, housing agencies and government-sponsored enterprises, as well as properties eligible for short-sale transactions
Some of the FHA 203k basic features are:
Low Down Payments — A minimum down payment of 3.5% down is required that has currently been lowered to 1.5%. The down payment funds can be money that you have saved, or may be a gift from family members. Loans and grants from down payment assistance programs may also be available. For refinances, the terms are different.
Flexible Underwriting Guidelines — Typically, you must have a credit score of 640 or higher, and you do not need to be a first-time homebuyer to be eligible for a 203(k) Renovation Loan. If renovation is extensive and the underwriter determines you cannot live in the home during construction, up to six months of mortgage payments — principal, interest, tax and insurance — may be included in the 203(k) Loan, so you don’t need to make double housing payments when the home is uninhabitable.
The best way to get started is to ask for an appointment or let us run a financial simulation for you. We meet with a large number of first time buyers via phone and can usually get you through a startup orientation in about a 20 minute call.