FHA 203K For a Perfect Home
An FHA 203k loan might be just the ticket for you to purchase that not so perfect home and make it perfect or to simply stay put and upgrade your existing home. The FHA 203k loan allows you to purchase a home and make required improvements to the property and desired cosmetic upgrades. Whether it be a purchase or a refinance lets dig into what the requirements are for the FHA 203k loan.
One key factor that comes into play is credit score. All lenders may have a different credit score requirement but with HomeBridge we will do the FHA 203k with a minimum credit score of 600, although a 640 credit score does not have any lender overlays and will offer a much better interest rate. If the credit score is below 640 we will want to see a lower debt to income ratio and no gift funds can be used for down payment. As much as the credit score is a factor so is past credit history such as a previous bankruptcy, foreclosure or short sale.
The next item that is considered is the debt to income ratio and with a 640 credit score the debt to income can be higher than other types of loans but will typically max out at about 54% debt to income. One important fact to note is that in the past if student loans were deferred they were not counted in the debt to income ratio however that has changed and now a student loan payment will be counted in the qualifying debt to income ratio.
Two Types of FHA 203K Loans
Now lets talk about the 2 different types of FHA 203k renovation loans we offer. One of the most popular ones is the FHA 203k Full or as now called the FHA Standard 203k. This one is most popular in Texas because it allows for foundation issues to be rolled into the loan and in general is geared toward homes that have structural issues or larger renovation projects. This program does require a FHA 203k consultant be on board for the project. The second FHA 203k program that we offer is the FHA 203k Streamlined or using the name is it currently called is the FHA 203k Limited. It used to be called streamline but now referred to as the Limited K and it allows for a max of $35,000.00 in renovation and is geared for light cosmetic updating to a home and does not require a consultant to be on the project.
Whether purchasing or refinancing and you are thinking renovation give me a call today to review the options with you !