What Is a 203k Mortgage?

After buying a house, cash-strapped borrowers might have a hard time making necessary home improvements. Traditional financing requires a purchase loan and a separate construction loan. The Federal Housing Administration offers the 203(k) rehabilitation loan to cover both a home purchase and property improvements. There are two versions of the 203(k) loan -- streamlined and regular.

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Streamlined 203(k) Loans Cover Minor Repairs

Homes in need of minor, cosmetic repairs may qualify for up to a $35,000 loan amount through the 203(k) streamlined program. FHA lenders require less oversight of the repair work in a streamlined renovation. You can use it to make a purchased property move-in ready or prepare your home for sale. Common repairs include interior painting, re-flooring and kitchen and bathroom remodels.

Regular 203(k) Is Used for Remodeling

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Source: ehow.com

Category: Credit

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