You may have any of a million reasons to give your home a new look or feel. Maybe you’re staging it for a sale. Maybe you’re ready for a new style. It’s possible you need to make the home livable if it’s a purchase. Whatever the reason, the cost adds up quickly. When it’s a necessity it may seem overwhelming.It doesn’t have to be. As a buyer or a homeowner you have a little-known option called the FHA 203k.This home improvement loan option is backed by the Federal Housing Administration. Because it’s an FHA product there are several buyer benefits. As you can see, a low down payment is great for any buyer or homeowner looking to refinance.

1. Low down payment requirement – FHA requires 3.5% down. That’s much less than other programs requiring as much as 20% down.
2. Flexible on what’s eligible for financing – FHA has certain requirements in a house where it backs the mortgage loan. So while there are certain things like flooring, no lead-based paint or mold you can also finance desired improvements like a kitchen remodel (pictured above) or vinyl replacement windows.
3. The FHA 203k considers after-improved value not just current market value – Making improvements to the home will increase its value. The loan is based on that value rather than the current value like a home equity line of credit (HELOC).
4. One mortgage payment – This is not a second mortgage or a home equity loan. This is one mortgage payment and one interest rate. It’s much simpler than borrowing on store credit, credit cards and a HELOC.
5. The financing is amortized over the life of the loan, not a “12 months no interest” type deal – The cost of the home improvements or renovations stays with the home and is amortized over the life of the mortgage. Selling the house? Those improvements are taken into consideration in the appraisal and paid off with the new mortgage and buyer.

Let’s look at a little more information on this option and what exactly the FHA 203k is.
The Federal Housing Administration’s, FHA 203k mortgage loan finances renovations by people who cannot afford to pay for the home improvement up front. Several properties are eligible for 203k financing:

• Condominiums (provided they are FHA- approved)
• The residential parts of a commercial building e.g. the staff quarters
• An already built house being moved onto a new foundation
• One-to-four family residential properties
• Partly built residential property

*Commercial property is not eligible for an FHA 203(k) loan.
If you’d like to learn more about this home improvement option, talk to the experts at Holland Remodeling & Building. We understand the housing market, and can help you figure out the financing.