An FHA 203k Loan is a loan designed by the Federal Housing Administration (FHA) which is part of the Department of Housing and Urban Development (HUD). In response to the housing market recession of the last decade, instead of building new houses, the 203k is to encourage the renovation and restoration of pre-existing houses. That is why they are referred to as "Rehab" loans. Some think of homes associated with HUD as being abandoned homes, however this program is open to be used on any home regardless of it's value.
There are two types of 203k loans. The first is called a Streamline 203k. The Streamline 203k is used for renovations under $35,000 and that do not include structural modifications. The second is called a Full/Standard 203k. The full/Standard 203k is used for renovations that are over $35,000, and since they allow structural modification, they have more inspection requirements than a Streamline 203k.
Watch the following video to find out more about the 203k loan:
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