What are FHA Home Improvement Loans?
Not only does a home renovation increase your home’s market value, but it can also help you avoid costly repair bills while improving the aesthetics of your neighborhood. If the high costs of a renovation are keeping you from making improvements to your home, you’re not alone. Thousands of Americans forego home improvements each year due to financial limitations and the fear of putting themselves further into debt. Fortunately, a Federal Housing Administration (FHA) home loan program can help.
Whether you plan on purchasing a fixer-upper or would like to make improvements to your existing home, an FHA home improvement loan may be the perfect solution for you and your family. By combining the construction funds with your mortgage, an FHA 203K loan limits your loan closing costs because it’s just one loan and simplifies the home renovation process. Backed by the U.S. Department of Housing and Urban Development (HUD), a home improvement loan is a great alternative to borrowers who are struggling to find other sources of financing for their home renovations.
Types of FHA Home Improvement Loans
When it comes to 203(k) home improvement loans, there are actually two types: the Limited 203(k) loan or “Limited K” and the Standard 203(k) “Consultant K” loan. The more common loan, the Limited K, is restricted to repairs or improvements that total $35,000 or less. If your home is not in need of structural repairs or only requires moderate renovations, the Limited K is perfect for you. If your home has structural issues or requires improvements that will exceed $35,000, you should look into the Consultant K loan.
Is Your Property Eligible?
Since these FHA-insured home improvement loans from HUD are intended for owners and not investors, you must inhabit the property within 30 days of closing if the property is habitable or within 30 days of completion of all repairs or upgrades if the house was not inhabitable. Additionally, the following types of homes are eligible for an FHA home improvement loan:
- Single-family to four-family dwellings
- Existing construction that’s been completed for at least one year1
- Tear downs, as long as all of the existing foundation will remain
- Moving an existing house to a new foundation
- Rehabbing the residential portion of a mixed-use property2
- FHA-approved condos.3
When it comes to an FHA home improvement loan, there are particular guidelines homeowners must follow. Fortunately, the HomeBridge Financial Services home loan experts can explain these guidelines. Contact us today and we’ll answer your questions about the types of repairs and renovations you can perform with a home renovation loan and, if eligible, we’ll get you started on the borrowing process.
HomeBridge is the top 203(k) lender in the nation. According to data from the Department of Housing and Urban Development (HUD), HomeBridge ranks No. 1 in the nation for originating 203(k) renovation loans.* Our Mortgage Loan Originators are ready and eager to discuss details of this helpful home-financing solution with you.
Source: HomeBridge Financial