What is an FHA 203 Rehab Loan?

If you’ve been looking into rehab loans, chances are you’ve come across the Federal Housing Administration’s rehab loan product, the FHA 203(k) loan. This loan is designed to help people who are interested in purchasing fixer-uppers secure a mortgage for such homes as well as the funding they need to perform necessary repairs. While FHA 203(k) loans are a great tool for people who are interested in living in a rehab home, they are not the right choice for investors. Here are a few reasons why:

First and foremost, FHA 203(k) loans are only for people who intend to live in the homes that they are repairing. If your primary interest is house flipping, you won’t qualify for an FHA 203(k) loan.

Secondly, even if you do intend to live in the house that you are repairing, the FHA 203(k) loan will limit you in a number of ways. For example, the funding that you’re allowed to apply for under the terms of an FHA 203(k) loan limit the repairs that you’re able to make to essential updates and renovations. If you’re interested in adding a pool, an outdoor barbecue pit, a luxury kitchen, or some other top-of-the-line upgrade, these costs will not be approved with an FHA 203(k) loan.
Third, there are limitations as to who can qualify for an FHA 203(k) loan based on income and credit rating. Of course, anyone applying for a loan will have to meet certain basic qualifications, but those set forth by the banks offering FHA 203(k) loans are more severe than those that can be offered by a rehab loan lender.

Finally, you’ll have to wait much longer to find out if you qualify for an FHA loan then you would for a rehab loan.

If your interest is in house flipping, then an FHA 203(k) loan isn’t for you. Instead, you can turn to the rehab loan lenders at Zinc Financial for funding that will meet your financial needs as well as your timeline. At Zinc Financial, our team is fully equipped to offer rehab loans for serious investors as well as newcomers to the house flipping trade. We can approve loan applications and have your money in your hands in as little as seven business days.

With our experienced and knowledgeable team on your side, you’ll be able to leverage your capital further and make wise investing decisions that will result in excellent return on your investments. Call us at (559) 326-2509 today to learn more about our rehab loan options.