There’s no denying the fact that homeownership is a critical component of the American Dream. This is especially true for today’s society, where having a home means more than just a symbol of wealth and status.
Although this is still true for many families in the United States, owning a home means the first step to financial stability. After all, it’s one of, if not the largest, purchase and investment they can ever make.
And much thanks to government-backed and -sponsored loans, more consumers in the U.S. have begun to look into their mortgage options.
For instance, there are the FHA 203k loans, which allow borrowers to use the loan amount for both home purchase and renovation expenditures.
Understanding FHA loans
FHA (Federal Housing Administration) loans, although called such, aren’t from this Department of Housing and Urban Development agency itself. The role of the FHA in these programs is to serve as the insurer.
Since this government agency backs the loans up, then mortgage companies have the assurance that they can recoup their money, thereby making them more agreeable to lower their rates.
What distinguishes the 203k loan from other FHA loans
One of the things that set the 203k loan program apart from other housing loans is its special features. As mentioned above, you can use the loan money you borrowed to complete the purchase of the house and at the same time, renovate or make improvements to it prior to moving in.
These are just some of the components of this particular program that makes it quite popular amongst borrowers. This is especially true for those who can’t make a standard down payment of 20%. With this loan, you typically only need to put at least 3.5% down.
The lower down payment requirement, combined with the low mortgage rate, gives you an easier way to become a homeowner.