How to get a Home Improvement Loan Without Buying a Fixer-Upper

Not everyone is brave enough to purchase a new fixer-upper home. This is especially true in the present climate, where home sale prices are starting to level off but still trending historically high. But just because you’re not quite ready to buy a new home in need of renovations doesn’t mean you can’t embark on a home renovation right where you are! That’s right – with 203(k) Rehabilitation Mortgage Insurance – home improvement comes to you. Keep reading to find out how you can qualify for 203(k) Rehabilitation Mortgage Insurance and how it works.

The History

First created in 1978, the 203(k) Rehabilitation Mortgage Insurance program is the means by which the Federal Housing Administration (FHA) facilitates the rehabilitation and repair of single-family properties. With this program, mortgage lenders offer homeowners a long-term, fixed-, or adjustable-rate loan that covers the refinance and rehabilitation of your home. While this program is great for people buying a home in need of repairs, it’s just as suitable – and available – for those wanting to pursue a home renovation of their current abode. 

Coverage Details

The list of home renovation items covered by 203(k) Rehabilitation Mortgage Insurance is lengthy and quite far-reaching. Among the many things this type of mortgage loan is good for are changes that improve the home’s appearance. Another is eliminating health and safety hazards inside the home. You can also replace or add flooring, roofing, gutters and downspouts. Yet another use of this loan is major landscape and site enhancements or a new plumbing system. See the full list of what you can do here. You might be surprised to learn all the improvements that are possible with a home renovation loan.

Eligibility Requirements

Worried about income limits for 203(k) Rehabilitation Mortgage Insurance? Don’t be. There is no income limit to participate in the program. As for credit, scores above 580 are eligible for maximum financing of 96.5 percent. Credit scores between 500 and 579 are limited to no more than 90 percent loan to value. Credit scores of less than 500 are not eligible, but you can always raise your credit score before applying. Even borrowers with non-traditional or insufficient credit histories are eligible for maximum financing on 203(k) Rehabilitation Mortgage Insurance.

Final Word

Want to learn more about home renovation loans and whether you might qualify? Contact us today. We’ll look forward to hearing from you whenever you’re ready.

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Are you currently working with a Fairway Mortgage Planner?

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