FHA 203k Eligibility To Be Expanded To Real Estate Investors

Posted on Sep 04, 2012

16 years ago, the FHA "construction loan" program was changed, and it was made available only for owner-occupied properties. Now, there's discussion of restoring 203k access. The Housing and Urban Development agency stated that it intends to re-open 203k loans to investors sometime soon, however, no specific date has been announced.

The FHA 203k mortgage is similar to a bank construction loan. Homeowners submit construction plans to the lender and the lender provides a loan based on the expected value of the home post-repair.

The FHA 203k has minimum eligibility standards:

  • Homes must have less than 4 units and must be at least 12 months old
  • Planned repairs must meet local zoning &building codes
  • If new living units are planned, they must be attached to the original structure

In addition, standard FHA underwriting requirements apply including minimum FICO scores for applicants and the meeting of minimum debt-to-income ratios.

FHA 203k loans can be used for foreclosures and fixer-uppers at the time of purchase, and may also be used for homes which you already own. 203k loans can be a less expensive way to finance home construction.

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