FHA 203(k) Home Loans for Home Improvement

This is a loan product for homeowners that need money to make improvements on a property they already own or for borrowers looking to buy property in need of improvements also known as a fixer upper. The Federal Housing Administration’s 203(k) loans are for houses that are damaged or are in need of renovation.
If you are purchasing a home, the loan covers the cost of both the property and necessary home improvements. The down payment requirement is currently 3.5 percent of the combined price of the home and repairs with flexibility in qualification requirements
If you own a home that needs help, you can refinance with a 203(k) FHA Home Loan. The loan can cover a vast range of repairs, including room additions, bathroom remodeling, roofing, flooring and air conditioning systems.

Home loan to buy a home

Qualification Requirements:

There are two types of FHA 203(k): standard 203(k) loans for homes that need structural repairs and streamlined 203(k) loans up to $35,000 for homes that need nonstructural repairs. The FHA insures the loans, but the funds come from a mortgage lender.
To qualify for a 203(k), borrowers must plan to live in the home they’re repairing. The following types of residence qualify:

• Houses that need to be demolished and rebuilt are eligible as long as most of the foundation remains.
• Existing building that is at least a year old.
• Single-family, two-family, three-family or four-family dwellings.
• Condos, if they have been approved for FHA loans.
• Mixed-use properties. If you are repairing only the home portion, a mixed residential/commercial property can qualify.
• Homes that must be moved to a new foundation.

Improvement that Qualify

The FHA has specific guidelines about which repairs qualify for 203(k) loans, and the lender will also stipulate what you can do. Eligible improvements include:

• Disability access
• Heating, ventilation and air conditioning
• Plumbing
• Roofing and flooring
• Energy conservation
• Kitchen remodeling
• New appliances
• Room additions
• Decks and patios
• Bathroom remodeling
• Room additions or second-story additions
• New siding
• Painting
• Finishing an attic or basement
• Site grading

Labor costs must be included in the loan, even if the home owner performs their own repairs. The repairs must be started within 30 days and completed within six months.


The FHA 203(k) loan amount includes the purchase price of the home plus the expected price of repairs. The home buyer has to provide a percentage of the loan as a down payment (currently 3.5%).
To apply, the borrower must provide:

• Proof of income
• Proof of assets
• Credit reports will be pulled
• A detailed proposal of the work required on the home, including a cost estimate for each repair, which can include a contingency reserve for cost overages
• A home appraisal, including how much the home will be worth after the improvements are made

An FHA 203(k) loan is especially beneficial for home buyers who cannot afford a finished home and are willing to take on a fixer-upper. If you choose to apply for a 203(k), keep the following in mind:

• Many lenders do not offer 203(k) loans.
• Expect to spend a lot of time on document preparation and bureaucracy.
• FHA 203(k) closing can take 60-90 days.
• Interest rates tend to be high, due to the risk involved to the lender.

Finally, keep in mind that home improvements cannot guarantee an increased value for your home. Be careful not to pour more money into the house than you could recoup in a sale.

California Mortgage Home Loan

California is a state known to have a volatile real estate market. Before the economic downturn, house prices were high in some cases ridiculously high! With the extremely high demand in a seller's market and the ability for buyers to get the mortgages that they wanted pretty easily, the sky was the limit!

Source: Bakersfield Homes

It is a different story post economic downturn, buyers are finding it relatively harder to qualify for a loan (especially as compared to pre economic downturn era!), and it is no longer an absolute seller's market! Although the trend shows that the real estate market is getting better, it has a long way to go to reach the heights that it had been at!

There are tips that can help in successfully obtaining a California Mortgage Home Loan:

• Ability to repay the loan! This is a major criteria that Lenders look at in evaluating the loan application. Typically the Lender will look at:
• your current employment - where you work, how much you earn and whether the employment is stable and long term.
• your history of paying previous loans - they will take special note of late payments and delinquencies and also your FICO score.
• Property. Where is the property located, is it in a known declining market or an appreciating market - they will correlate their risk to the amount of down-payment that you will be making.

There are many things that a Lender may accept if you come up short on their basic list of criteria, but in order to be prepared and to successfully negotiate the loan it is advised that you work with an experienced loan broker that provides services for California Mortgage Home Loans!



Mortgages for the Self Employed

 

So you have worked hard, because you had a goal: "Be my own boss!" You are finally your own boss and own your own business, you are making money that goes into your own pocket and you are working the hours you want to work - you are finally where you want to be! Now you want to purchase a home, but you are having a hard time finding a mortgage because you are self-employed! This is the story that the majority of self employed people have that are currently looking for a loan to purchase a home or even refinance one that they already own.

 

 

Source: bizjournals

 

 

Why? Two reasons, firstly their tax returns do not reflect their actual take home income! (Isn't one of the benefits of owning your own business that you can write off all eligible business expenses, thereby reducing your taxable income?) and secondly, income varies unlike a paycheck.

 

Before the collapse that led to the economic crunch a few years ago, self employed people could take advantage of Stated Income Stated Assets (SIVA) or No Income No Assets (NINA) loans, but these are very rare to come by at present.

 

So is there hope for self employed people to get a mortgage? Yes but to be frank it is harder to get a mortgage if you are self employed then it would be if you had a regular paycheck. Lenders usually require two years of both business tax returns and individual tax returns, a CPA letter confirming that you have been in business for at least two years and a year to date profit and loss statement.

 

Additionally, self employed borrowers will need to have good FICO scores, be at least 25% owners of the business and have cash reserves of six months. 

 

If you do not have all the above, there still may be hope for you! There are portfolio lenders that will lend based on individual situations, but you need to work with an experienced broker in this niche as these lenders are few and known to brokers specializing in those loan types.

 

Smita Patel of Loan People USA has worked with self employed borrowers for many years, if you are looking for a home loan for self employed please call her at (949) 313-7333. 

 

Morrtgage to buy a home