Roll the cost of the home and a remodel into a rehab loan, great for turning that fixer-upper into the home of your dreams. There are options for an FHA loan, known as 203 (k), or a conventional homestyle loan.
Knock out a home purchase and possibly a wall (during renovations) with a single loan. Having either FHA or conventional options mean rehab loans are accessible to a wide range of borrowers.
You have the ability to use a 203k loan for improvements on a refinance or purchase. A standard 203k loan can be used by homeowners or homebuyers who would like to finance a property that requires major renovations. With the standard 203k loan, you have the ability to get just one loan for the cost of your mortgage, along with the required repairs.
The Limited 203(k) program is designed for homes that don’t require structural repairs. These loans are capped at a maximum of $35,000 in repairs. No minimum amount of repairs must be made. A limited loan is ideal for a buyer who needs to paint walls, replace carpets, or do a minor remodel.
Regular 203(k) loans are given for homes requiring more complicated construction projects like structural changes, room additions, or renovations that would prohibit you from living in the house while work is done. This will also include architectural drawings and inspections. A HUD consultant will be assigned to ensure the schedule for renovations is met.
Both loan programs require the repairs to start within 30 days of the loan closing and to be completed within six months.
The FHA has specific guidelines about types of projects you can finance with a 203(k) loan, but generally the only home improvements that you can’t finance are luxury items like a swimming pool.