FHA 203k Home Loans in Idyllwild-Pine Cove, CA
Borrowers who wish to buy a fixer-upper often run into trouble when they discover their lender will not provide a loan on a home that is considered "uninhabitable" in its current condition.
A FHA 203k loan allows consumers to borrow money for home improvement and home ownership in a single loan. These loans are offered by the Federal Housing Administration (FHA) to encourage lenders to loan money for seemingly risky purchases, with a goal of revitalizing neighborhoods and improving homeownership opportunities.
FHA 203k loans are designed for damaged homes or those requiring significant rehabilitation in Idyllwild-Pine Cove, CA. The loan covers the cost of the property as well as necessary repairs.
How FHA 203k Loans Work in Idyllwild-Pine Cove, CA
The maximum FHA 203k loan depends on whether it is a regular loan or a streamlined FHA 203k. With a regular loan, the maximum amount a borrower may receive is the lesser of the as-is value of the property plus repairs, or 110% of the estimated value of the home once repairs are complete. With a Streamlined FHA 203k, borrowers may receive a loan for the purchase of the home plus $35,000.
FHA 203k loans may be adjustable or fixed rate mortgages with a 15- or 30-year term in Idyllwild-Pine Cove, CA. Rates tend to be slightly higher than a traditional FHA loan.
Homes That Qualify in Idyllwild-Pine Cove, CA
For a regular 203k loan, the home may have structural repairs that are necessary. A Streamlined 203k loan is for homes that require non-structural repairs.
To qualify, the homeowner must plan to live in the home. The following types of homes qualify for an FHA 203k mortgage:
- Tear-downs, as long as part of the foundation remains
- Existing construction that is at least 12 months old
- Single-, two-, three-, and four-family homes
- Condos if they are approved for FHA loans
- Mixed-use properties if only the home portion will be repaired
- Homes that must be moved to rest on a new foundation
Guidelines on Qualifying Repairs in Idyllwild-Pine Cove, CA
The FHA offers strict guidelines on which repairs can qualify for a 203k loan,
and the lender may stipulate which repairs are allowed.
Allowable repairs include the following:
- Bathroom remodels
- Kitchen remodels
- New appliances
- Room additions or second-story additions
- Patios or decks
- Finishing a basement or attic
- Energy conservation repairs
- Roofing and flooring
- Plumbing
- HVAC (heating, ventilation and air conditioning)
- Disability access
- Site grading
Additionally, labor costs must be included in the loan, even if the homeowner plans to perform the repairs.
Repair work must be completed within six months of obtaining a 203k loan.
Pros and Cons of a 203k Loan
The main benefit of an FHA 203k loan is they allow buyers to purchase a home that needs repairs that would otherwise have been unaffordable in Idyllwild-Pine Cove, CA. There are usually minimal down payment requirements, and interest rates tend to be low, although they are not as low as a traditional FHA loan.
Not all properties will qualify for a 203k loan, and not all lenders offer this product in Idyllwild-Pine Cove, CA. To apply, the borrower must provide proof of income, assets and sufficient credit, as well as a home appraisal, how much the home will be worth after repairs and a detailed proposal of the work necessary on the home. A 203k closing may take anywhere from 60 to 90 days.
