5 Reasons to Avoid the FHA 203k Mortgage

Stay away. Keep out. Danger zone. Avoid at all costs. That’s the idea behind avoiding the FHA 203k . I’ll give you 5 reasons to avoid the 203k renovation mortgage momentarily. First, let’s figure out what the FHA 203k is, and why you’d use it in the first place.

The FHA 203k is a section of the FHA mortgage loan guidelines that covers financing home improvements, repairs and renovations into the cost of a mortgage loan. This basically means you as a borrower could finance the cost of a house and repairs or upgrades, and pay one monthly payment.

The FHA 203k covers repairs like: new roof, siding, flooring, paint (inside or outside), appliances, additional bathroom, kitchen remodeling, basement waterproofing, mold eradication, lead-based paint abatement, sill plate replacement, disability access imporvements and more. Basically, if it’s not a luxury item like tennis courts or a jacuzzi, the project can be financed with the FHA 203k.

Financing for the 203k will cost you about $6 a month more on your monthly mortgage payment for every $1,000 in work you finance. So a $10,000 project will add about $60 a month to your mortgage. Because it’s part of your mortgage, the interest is tax deductible, and the cost staty with the home if and when you decide to sell the house. If you were to finance the work with consumer credit, it would follow you if you sold the home.

Watch the 3-minute video below with Renovation Lending Expert Joe Daly explaining the 203k loan program.

You can click the link to watch it in the AmeriFirst YouTube channel: What is the FHA 203k?

Now that you know what the FHA 203k is, let’s run down a list of why you should avoid it.

1. You’re Tim The Tool Man Taylor and you can do the work yourself, no matter what may go wrong. The FHA 203k doesn’t really cover do-it-yourself work. If you want to add the bathroom yourself, be sure to keep the electrical outlets away from the toilet, and find another way to finance it.
2. You’re convinced a Zombie Apocalypse is coming. If this is the case, first read Max Brooks’ The Zombie Survival Guide . Then, fortify your house with steel doors, gun towers and chainsaws at-the-ready. This work is not covered by the FHA 203k. (however, you can Protect Against the Zombie Apocalypse with a Renovation Loan if you’re creative)
3. You just won the lottery and can afford a million-dollar home. If this is your situation, first of all: congratulations. Secondly, feel free to send a donation to. never mind, that’s probably not ethical. In any case, if you have the money to buy a new home that needs no improvements, repairs or other work, then the FHA 203k is for your less-fortunate friends who didn’t win the lottery.
4. You like living in a house with not enough bathrooms, an old out-of-date kitchen and no deck, ThankYouVeryMuch . If the house your real estate shows you is missing all kinds of things you’d love, but you’re okay with settling for the mediocre, then by all means avoid the FHA 203k. After all, it covers home improvements like a new deck, a remodeled kitchen and additional bathrooms. Just be sure to install a take a number stand at the bathroom door.
5. You’re giving up the comforts of land for a house boat. Um. yeah. the FHA 203k won’t cover work you may want to have done to a house boat. Just be sure to invite us to the house-boat-warming party. We enjoy a day on the water as much as the next guy. Or gal.

Now, if none of these situations cover your life, and you’re considering buying a house that may need a little TLC, then the FHA 203k mortgage may be right up your alley.

Want to learn more? Download the FHA 203k Survival Guide at the button below. It’s in no-way related to any zombie survival guides. We promise.