Mortgage Advice

How the 203(k) FHA Loan Can Make Your Dream Home a Reality

December 20, 2012

Excited and eager homebuyers embark on an endless pursuit to find the perfect house, only to find out that it’s much more challenging than they initially expected. We all grow up imagining what our dream home will look like and we all have our own preferences when it comes to interior design. Even if we’re lucky enough to stumble upon a property that is pleasing to the eye, the inspection process may reveal repairs that need to be addressed. Whether it needs some repairs or is simply outdated, there’s a way to make your new house feel like home without exhausting your bank account.

The FHA 203(k) loan program enables homebuyers to finance their home purchase and home improvements under a single mortgage loan without having to exhaust their personal savings or take out interim loans with high interest rates.

Whether you want to paint the walls, fix the plumbing or even purchase brand new appliances, the possibilities are endless regarding the types of improvements that can be made. The only requirement is that all health, safety and energy conservation improvements must be addressed and approved prior to completing general home improvements.

There are two types of 203(k) loans: The streamline 203(k) loan and the full 203(k) loan. The streamline 203(k) loan covers home improvement projects $35,000 and under, while the full 203(k) loan can be used for more elaborate projects that are more than $35,000.

Under each loan, the proposed home improvements will need to be assessed by a contractor prior to closing. The contractor will then put together a bid that the mortgage lender will use to determine the total value of the loan, which is the sum of the price of the home and the cost of the bid.

It’s important to hire a licensed and insured contractor who is knowledgeable about HUD guidelines and who has had prior experience with 203(k) loans. To find a Ross Preferred Contractor in your area, visit

Ross Mortgage customer Jerry recently applied for a 203(k) FHA loan and said the process was an “efficient and seamless experience.” Here’s Jerry’s 203(k) loan story. We’re proud to be a nationally ranked 203(k) mortgage lender.

If you’re considering purchasing a house that needs a little elbow grease and TLC, or even if you would like to refinance your existing mortgage to include some home improvements, consider applying for a 203(k) mortgage loan. Remember, any house can be transformed into your dream home.

If you have any questions or would like to learn more about the 203(k) loan program, leave a comment below or contact us at 800.521.5362.

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