Like all FHA loans, the 203k has a low down payment requirement. The loan requires you to put down 3.5% of the total purchase price plus repair costs and required contingency (“buffer”) costs.
For instance, a $200,000 home with $30,000 in repair and contingency costs would require a down payment of $8,050 (3.5% of $230,000).
Keep in mind that closing costs apply and are in addition to the down payment. Closing costs for a 203k loan are typically between 3% to 6% of the purchase price.
It will likely take 60 days or more to close a 203k loan, whereas a typical FHA loan might take 30-45 days. There is more paperwork involved with a 203k, plus a lot of back and forth with your contractor to get the final bids. Don’t expect to close a 203k loan in 30 days or less.
Usually, no. You must choose licensed contractors for all work. The only exception is if you are licensed and a full-time contractor by trade. In these cases, some lenders may approve DIY work.
Yes. You can choose a 203k loan with an adjustable-rate (ARM) or a fixed rate (30- or 15-year term). An adjustable-rate could save you money, especially when rates are high, if you plan to sell the home soon after the first year you own it Arizona payday loan alternative.
Yes. Along with the usual closing costs, expect an extra supplemental origination fee of about 1.5% of the loan amount. Continue reading “Can I refinance into a 203k loan?”