The US Department of Housing and Urban Development provides mortgages under Section 203(k) of the National Housing Act, which allows the Federal Housing Administration (FHA) to make insurance for rehabilitation and repair loans available. With a down payment of at least 3.5%, low- and moderate-income families can utilize the 203(k) program to make their dream home a reality.

FHA requires that you use a minimum of $5000 towards repairs and improvements, and that they are completed within six months of the loan closing. Funds may not be used for luxury items, but minor cosmetic repairs may be permissible. Additionally, the total value of the property must fall within the FHA mortgage limit for the home’s geographic area. At Cornerstone Home Lending, we’re happy to help you assess whether the property of interest is 203(k) eligible, and if such a loan is the right choice for you and your family.

There is a Supplemental Origination Fee and 3rd party fees as allowed by FHA. Additionally, 203(k) loans require some form of monthly mortgage insurance, the cost of which is determined by the loan amount and term. All 203(k) loans also require an upfront mortgage insurance premium.