November 5, 2019
If you are in the market for a new home you may be considering your financing options. There are many types of loans available, and some are better suited for certain situations than others. In some cases, properties may need some improvements which can be done with a renovation loan, but for some buyers, there may be a better option.
A 203k loan can be a great option for buyers who need a loan that allows for renovations but are struggling to get a conventional loan. Let’s look at what a 203k loan is and who can benefit from one.
What is a 203k Loan?
A 203k loan is an FHA loan that is backed by the government that allows the buyer to borrow not only the cost of the property but also the cost of the repairs to the property. These loans are a great option for many buyers because lenders are more willing to lend on a government-backed loan. Likewise these loans often also include the money needed for temporary accommodations while repairs are made to the property.
Who Can Use a 203k Loan?
Because a 203k loan is backed by the government, many homebuyers who can’t qualify for a conventional loan, likely because of their credit score, can qualify for an FHA 203k loan. These loans are best for buyers who are purchasing a modest home, and usually, don’t work for a very oversized or overpriced home.
Buyers who want to do their renovations themselves may also have difficulty qualifying for this type of loan because the lender wants to ensure the work is done within a set amount of time (usually six months). These types of loans usually require that a contractor be hired to complete the work.
Is a 203k Loan for Me?
So is a 203k loan a good option for you? That depends largely on your credit and the property you are looking to purchase. By working with a mortgage lender who specializes in these types of loans you can be sure you get the best loan for your circumstances.
Your 203k Loan Private Lender in MD
At Maryland Private Mortgage we specialize in non-traditional loans and we’d love to help you determine if a 203k loan is the best loan for your home purchase. We are a direct lender in Baltimore, MD and we’d love to work with you on the purchase of your home. Give us a call today to discuss your project!
The Maryland Private Mortgage Lending Team