What is a 203K Loan?

Mike Young, 203K Mentor and Trainer

This past weekend a few of flew out of Springfield to Las Vegas, to meet with Mike Young, our 203K mentor and trainer.  Mike has been training around the country since 1995 and has been instrumental in teaching our company how to conduct 203K  services properly and it was good to meet one on one with him to dig deeper into the 203k process, learn more about the software tools, and ways to streamline our services.

203k – what is it?

The FHA 203k loan guarantee program is a standard FHA loan (203b) with an additional “construction” component. That is to say you can purchase or refinance a property and get the money to renovate the property all in one low interest loan.

The lender actually loans their own money with a guaranteed from FHA that the loan will be paid in full under the terms of the loan or FHA will pay off the loan and take the property back.

The unique thing about this loan program is that it includes low interest, fixed interest. and money for the renovation all in one 30-year, fixed rate mortgage.

What amount of repairs  are available?

The amount of repairs available are up to the maximum mortgage limits for your county. Most repairs are eligible under the program however, septic repairs if needed can only be done under the “full 203k program” not the streamlined k.

Standard and Streamlined 203K

In general, with a 203k loan, you can get the funds to purchase a rehab home and an additional $35,000 to make renovations and cosmetic repairs.  You can typically choose from a 15 year or 30 year fixed rate mortgage, or adjustable rate mortgage loans.  The loan amount is usually for more than the purchase price of the home, so there tends to be stricter requirements for 203K vs a traditional FHA loan.  One of these differences is the minimum credit score requirement.

There are two types of 203k rehabilitation loans, the streamline and standard 203k, or construction 203k loan. With the standard 203k loan there is no cash limit, however there is more paperwork required, and you must hire a 203k consultant (Steve Mirowski)  to oversea the project.  203k streamline mortgages allow for mostly cosmetic renovations and basic repairs and the maximum amount you can receive is $35,000.


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Dana Mirowski

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