What is a 203K loan?
There are 2 basic 203K loans available. The first type is called 203K Streamline where you can borrow a minimum of $5000 repairs but no more than $35000 with includes some fees and other expenses. The 2nd type is a 203K Rehab loan. This type of loan requires you to borrow a minimum of $35,000 for repairs and improvements to your house or structural repairs are needed. Regardless of what the structural deficiency is or the cost this type of loan must be completed under the 203K rehab loan program and will require the services of a Certified 203K Consultant. Both loans are guaranteed by the US government.
What is the difference between a standard FHA 203b and a FHA 203K?
There is one major difference between these 2 types of loans. With the standard FHA 203b all repairs have to be completed prior to the closing on the house. In essence the property has to be in good shape and meet the FHA standards set by HUD. With the 203K loan whether it was streamline or rehab the monies for repairs are placed in an escrow fund at the time of the closing and repairs are made by a contractor after.
How much money do I need for the down payment?
3½%
If my credit is a little less than perfect can I still qualify for a loan?
Absolutely! Most banks want to see a credit score of 700 or 720 as a minimum before extending credit on a conventional loan. On an FHA 203K loan they will generally accept a credit scores as low as 680 and in some instances as low as 640.
Do all banks offer this type loan?
No. Most of these loans are available through a mortgage broker. However, there are a few banks out there that will handle this type of loan. For more information visit www.hud.gov/ll/code/llslcrit.cfm for a list of lenders or call our office at (321) 676-0836 and we will put you in touch with a lender that can help and assist you in getting your loan and walk you through the process.
What about interest rates?
Interest rates for a 203K loan are about the same as for a conventional loan and in some instances maybe lower. Interest rates are at an all-time low that haven’t been seen in 50 years.
What are some of the “PROs” of a 203k loan?
When your purchase a distressed property the houses are usually priced well below the market value because most are bank owned and they want to dispose of these properties. For this reason often times when people purchase these properties end up with 20% or 30% equity in the house after repairs are made. It doesn’t happen all the time but it happens more often than not.

Some lenders will mortgage 110% the value of the house.

Little risk to the homeowner with only 3 1/2% down and all loans are backed by the US government.

Lower credit scores are accepted to qualify for a mortgage. This is great for the first time homeowner who may not have a long credit history or very little credit.
Are there any “CONs” associated with 203k loans?
The home you purchase must be your primary residence and live in it for at least 1 year before you can resell it.

This type of loan cannot be used for the purchase of investment property. However there is an exception. If the property you are purchasing is 4 unit or less and you are planning on living in 1 unit as your primary residence you can still qualify for this loan.

Your loan will be subject to mortgage insurance as like any other FHA loan.
What are the differences between 203K Streamline and 203K Rehab?
A 203K Streamline Loan (under35K) has the following restrictions:
  • No Pool Repairs
  • No Termite Damage Repairs
  • No Fencing
  • No Landscaping
  • No Tree Removal
  • No Irrigation
  • No Deck or Patios
  • No Driveways
  • No Structural Repairs
  • No Moving of walls
  • No Co-Signers
  • Maximum Of $30,000 In Repairs ($35K Total Repair With Escrow)
  • Requires Contractor To Get 50% Of payment Up Front (can be high risk for buyer)
  • Min Repair Cost of $5000.00 Required unless Structural Issues are present
  • No need to hire a Consultant unless structural repairs are necessary and the project is deemed complex
A 203K Rehab Loan (over 35K) is much more flexible:
  • All Repairs Are Eligible (with the exception of sink holes)
  • You Can Tear A Home Down And Rebuild (one wall standing)
  • Illegal Additions Can Be Fixed/Brought To Code
  • Garage, Room Additions, And Room Changes Allowed
  • All Structural Repairs Are Allowed
  • Termite Repairs And Treatment Allowed
  • Pool Repairs Allow Up To $1500.00
  • HVAC
  • Electrical
  • Plumbing
  • Fencing, Landscaping, And Tree Removal Allowed
  • Co-Signers Allowed
  • Repair Amounts UP To Max FHA Loan Amounts
Contingency Funds For
  • Unforeseen repairs
  • Buy appliances
  • Additional work
Qualifications and Interest rates
  • Lower credit scores allowed
  • Refinancing
  • House must have been lived in for 1 year to qualify
  • No restriction on who can qualify for 203K loan
  • 3 1/2% down payments
  • Mortgage Insurance required
  • Must live in the house 1 year before you can resell the house
What are the advantages of a 203k loan?
  • Available to all home buyers and can be used to refinance existing home
  • More equity upon completion of repairs
  • Depressed housing values allow owners to buy homes in upscale communities
  • Low down payment
  • Can be used to renovate up to 4 units
  • Buildings with residential and commercial occupants can be renovated under certain conditions

Who is HousePRO Inspection Services?

HousePro Home Inspection services logo.

HousePRO Inspection Services has been in business since 2009 and the owner has over 35 years of experience in construction. The owner is licensed as a home inspection and is fully insured. In 2012 we saw an opportunity to become a Certified 203K Consultant for FHA loans in hopes of helping people get into their dream home. The program provides a great opportunity for young families to get into a house with little money down. We normally inspect in Brevard and Indian River Counties but will travel into eastern parts of Orange and Osceola Counties when consulting for anyone financing a home using the 203K loan program. For more information be sure to call our office at 321-676-0836.