From minor fixes to major remodels, home improvements can better your quality of life and make your home more comfortable to live in. They may also increase or preserve the value of your home, making it more attractive to potential buyers when it comes time to move and sell. However, renovation projects can be costly and often require cash upfront making financing difficult for many homeowners.
Thankfully, there are several options that can aid borrowers in financing their home improvement projects. One such option is an FHA 203k home improvement loan. This loan is backed by the Federal Housing Administration and allows you to combine renovation costs with your mortgage, resulting in one loan with one closing.
With an FHA 203k home improvement loan, the amount borrowed is an aggregate of the home’s price along with an estimate of repair and labor costs. You can cash-out up to $35,000 for your home renovation projects and maintain a mortgage balance that exceeds the value of the home. And though FHA 203k loans are insured by the FHA, they don’t require borrowers to have an existing FHA loan to refinance into a 203k loan.