The FHA 203k is a renovation loan program that provides funds for both the purchase and renovation of a home. There are two types of an FHA 203k loan. The first is normal 203k, which is given for properties that need structural repairs such as a room addition, or for when repairs are more than $31,500. This loan requires a HUD inspector and is more costly. The second is the streamlined203k or what is now called the Limited203k, which is given for non-structural repairs or for when repairs total less than $31,500. The typical repairs we see on Limited FHA 203k loan are roof, HVAC, flooring, minor kitchen or bathroom updates. This is a fairly simple process and we have closed many of these loans. If there is only one repair type needed such as only flooring or only roof then you just provide one estimate from a local licensed company. If there is more than one repair type then you will need a General Contractor to oversee the project and you will need to provide the estimate from the GC. We then take the repair estimate, add 10% for cost over-runs and add that to the purchase price and then your 3.5% down payment is computed from there. So, yes you can buy a house and borrow more money than the purchase price. You don’t need tens of thousands of dollars in the bank to fund the repairs and improvements yourself.
What about an FHA 203k loan if you already own your home? Yes you can do a FHA 203k loan for a refinance as well!
With FHA though we have to keep the loan amount within the FHA guidelines and presently in Alachua County the maximum loan amount is $275,665. Different counties have different limits so check with us for the maximum loan amount for each county in Florida.
Florida FHA 203k Loan Requirements
- Down Payment – 3.5% of the purchase is the minimum down payment available.
- Credit Score – A minimum credit score of 600 is needed to qualify for maximum financing.
- Debt to Income Requirements – A debt to income ratio of 43% is generally needed if your credit score is under 620. A higher ratio of all the way up to 56.9% may be approved if the credit score is over 620.
- Property Requirements – All properties must meet certain security, safety, and structural integrity requirements. We can do single family houses, mobile homes on land, townhouses and some condos.
- Owner Occupied property only
- The biggest concern is that you do not want to over improve your property for the neighborhood.
- Maximum loan size is the FHA limit in that county. An option that works for when the price is too high to meet FHA standards or non-owner occupied properties is a Fannie Mae Conventional Renovation loan and this is just like the more common FHA 203k and again we are experienced on this loan too.
Whether you are looking to purchase your very first fixer upper home in Gainesville, Florida or Alachua County or any area in Florida, Alligator Mortgage Company offers great rates and terms on an FHA 203k loan. Contact us today for more information on Florida FHA loans or to begin the pre-qualification process.
Don’t let a house that needs repairs scare you away.