Many mortgage companies and banks are advertising their low rates for FHA 203k purchase loans. There is no doubt that for people looking to get a home in need of some modest repairs and updates the FHA 203k is a great financial move. However, that loan is not a purchase only type of mortgage. It can also be used for people who currently own a home and would like to refinance to a low rate while getting a small amount for some renovation projects.
Minimum Amount for Repairs
In order to refinance using the FHA 203k the borrower must get at least $5000 to be used for either repairs, improvements or both. For people who are real handy and don’t mind doing the work themselves, this small amount can go quite a ways towards paint, carpet or new appliances. It is also a good amount for someone that has a modern home but simply needs a little extra money for something like a new roof or storm windows.
Types of Improvements
There are some restrictions on the type of improvements that can be made on a home using the FHA 203k program. Here is a list of the majority of the items allowed.
- Adding on or repairing a bathroom
- Installing solar panels
- Adding appliances to the home that are more energy efficient
- Safety items like repairing damaged handrails on stairs or removing old lead paint
- Repair to necessary systems in the home such as plumbing, heating, ventilation, electrical or air condition.
- Repairs to the floor or a new floor
- Outdoor projects such as decks, landscaping, patios, fencing and driveways