Home improvement loans, also known as FHA 203(k) loans, are federally guaranteed mortgage loans. Their primary purpose is to fund repairs or renovation projects. Home improvement loans are for a specific amount to complete a rehab project. In contrast with refinancing a home, which generates an extra-long term mortgage, or a line of credit, home improvement loans typically are active for a limited period of time shorter than a mortgage. Home improvement loans are made on your primary residence for up to a maximum of 110% of the after improved value of your home. Home improvement loans can be made for five to ten years and the equity of your residence will be the collateral. The terms for this type of loan depend generally on your financial standing.
These loans have a minimum of $5,000 of required repairs with no maximum and they can be used to repair your existing primary residence or for the one you plan to purchase. The total value of the property must still fall within the FHA mortgage limit for the area.
The qualifying conditions are similar as for every other FHA forward mortgage. A potential applicant will need to have certain credit score and income. You will need to get an estimate from a state licensed contractor for all work to be performed. If total repairs exceed $35,000 or if repairs are of a health, safety or structural nature then an inspector from the Department of Housing & Urban Development will be needed to supervise the rehabilitation project.
You can qualify for Home Improvement Loans for the following activities:
If you need guidance for this type of loan, our mortgage experts are here to help you. Contact us at (323) 692-1080.