Since the housing crisis of the Great Depression in the 1930's, FHA-insured loans have been helping families make their dream of home ownership a reality. At a time when so many people faced eviction, these loans were the only thing that helped many people realize their dreams of home ownership.

Today, a similar crisis has occurred and again people are finding that FHA 203K renovation loans are a great option in a market which has many people concerned. Many people are familiar with 203b loans and a 203K loan is just a modified version that affords people the ability to renovate a house within the loan itself.

Since distressed properties can be one of the most financially sound investments for first time homeowners, it is important that people are made aware of just what these loans offer.

Not everyone is entirely sure about these loans or the benefits they offer so there can be some misconceptions out there. Many would-be homeowners are convinced that, while they could possibly afford a distressed home, they could never afford the costs of renovating it. The out of pocket costs are the major hurdle that most first time buyers must overcome.

Where Do I Begin?

The first step is to discuss a 203K loan with multiple lenders until you find the one that is right for you. You want someone experienced with 203K loans and not someone who is just starting to work with them. Once you have secured your small down payment, as little as 3.5%, you can begin looking at homes.

Why Choose a Fixer Upper?

It is no secret that buying a distressed home can make the dream of homeownership a reality for someone who does not have a large amount of money to put down on a new home. Finding a distressed home in a great neighborhood can be a terrific way of moving into a nice area and building your home's value over time. This means that you will be searching a neighborhood you love and getting a house as affordably as possible.

How Does a 203K Loan Make Any Home a Dream Home?

Remember that you can always change the house, but you can never change the neighborhood. With a 203K loan, you can allocate additional funds within the loan to renovate the house as necessary.

These renovation loans let you borrow the money in a package with your home loan. What this means is that you can buy a distressed house on a great lot and pay off the renovation costs over time, meaning you can get a great deal on a distressed home and turn it into your dream home.

Working With a Real Estate Agent

Not all real estate agents will be familiar with 203K loans and some may not be initially willing to work with them. Some agents may be under the impression that they are only good for dilapidated housing in need of major repair. This is not true. 203K loans are restricted to non-structural renovations which are intended to improve the quality of a livable house.

Is a 203K Loan Expensive?

The purpose of a 203K rehab loan is the make homeownership possible for first time buyers. The rates on these loans are at historic lows.

While there are additional renovation costs within the loan itself, they are offset by the additional value the renovations add to the home and they are not covered out of pocket. These loans were created with the express intention of getting people into homeownership and, thus, are the most affordable option available.

A 203K renovation loan is a great option for someone looking to buy a house in a neighborhood where normally they may not be able to afford a house. Since holding onto foreclosed properties costs banks money, they want to get them off their hands quickly. With a 203K loan you can take advantage of this by getting a distressed house in a great neighborhood and turning it into the home you have always wanted to own.