The Federal Housing Administration (FHA) is an integral part of the Department of Housing and Urban Development (HUD). The Federal Housing Administrations oversees various single-family programs of mortgage insurance such as the FHA loan insurance program. The mortgage insurance programs operate through FHA’s authorized lending institutions that submit application/s to have the submitted property appraised. Afterwards have the potential buyer’s credits be approved. Said lenders funds the loans (mortgage) that the Department then insures. Please be advised that HUD doesn’t allow direct form of loans for the purpose of helping people to buy their homes.
The 203k loan program, is the primary program of the Department. This is for the repair and rehabilitation of properties owned by single-family. This loan is basically just for home improvement/s. As such, this is a significant tool for neighborhood and community and expansion opportunities of homeownership. Given that these are the main goals of HUD, said Department truly believes that 203k loan or the FHA loan insurance is a significant program. Supporters and lenders alike are encouraged to continue on supporting this program by actual participation.
The FHA 203k or the loan insurance program together with their partners (the state and local housing agencies and other non-profit type organizations), has been successfully used by Lenders for the purpose of rehabilitating properties.
Mortgage lenders, together with the state and local government agencies, found ways to put together the FHA loan insurance and other financial resources. HUD’s HOME, HOPE; the Community Development Block Grant Programs has been created to help and assist borrowers. Some state housing financing agencies designed some programs for use together with FHA loan insurance or the 203k mortgage loan. While other lender has used local housing, agencies and other non-profit organizations expertise in helping them manage the actual rehabilitation process.
The HUD believes that the FHA 203k loan program is a great way for all lenders to be able to demonstrate their ability and full commitment to allow lending to low income communities. With the vision to help them meet their responsibilities lawfully stated under Community Reinvestment ACT of the CRA. The HUD is highly committed to increase family’s homeownership opportunities. CRA lending programs is best partnered with Section 203(k).
How to use FHA 203K Loan:
This program is intended to be used for the purpose of accomplishing rehabilitation or any improvements of a pre-existing one up to four units, homes in one of three ways;
o To buy a house and lot and rehabilitate it.
o To buy a house on another site. To move it on a new site on the said mortgaged property and then rehabilitate it.
o To use for refinancing of existing debts and to rehabilitate a house;
For you to purchase a house and lot and rehabilitate it, for refinancing existing debts and to rehabilitate a house, said mortgage and any loan proceeds (such as other rehabilitation funds) should readily available before the start of rehabilitation begins.
For you to buy a house on another site, to move it in a new site and then rehabilitate it, the mortgage should be cleared first on the said property; but loan money for the transferring of the house can’t be released not until the unit/s is then placed onto its new foundation.