You may have suffered some damage to your home due to a recent natural disaster such as flooding, storm or fires. Or maybe you just found a great deal on a depreciated home! Either way, you may want to consider looking into an FHA 203(k) loan.
This rehabilitation mortgage allows for borrowers to buy or refinance a home to finance the cost of the renovations using the future value of the home. You just have to make sure you are planning on using this home as your primary residence (sorry, no investment properties).
Here is how it works
Let’s say your home suffered some roofing damage due to a storm and you will need to completely remodel your kitchen. If you qualify for a standard FHA 203(k), the loan will allow you to make disbursements from the escrowed renovation funds in order to fund your remodel.
If your damage is not as extensive as a major remodel or landscaping, a Limited FHA 203(k) may be a better option. This plan is set in place for repainting, damage to flooring and other smaller scale renovations.
Keep in mind, if your home has suffered major damage, consider looking into an FHA 203(h) instead.
Have you or anyone you know has suffered damage to their home due to recent disaster?
By Meagan Rochard