Fact or Fiction: 203(k) Rehabilitation Loans
About This Quiz
Many people in the market for a home shy away from those in severe disrepair because they can't pay for the renovations. Luckily, there's the 203(k) loan, which gives home buyers both money to purchase and renovate all in one. See if you know how to qualify for a 203(k) loan in this fact or fiction quiz.
You can use your 203(k) loan to buy things like a flat screen TV and furniture.
"Luxury" items that aren't a permanent piece of the home won't be approved on your 203(k) application. This includes TVs and furniture.
You can purchase a four-unit building with a 203(k) loan.
203(k) loans can be used to finance a one- to four-unit dwelling.
With a 203(k) loan, you can put as little as 3.5 percent down on your home purchase.
You can put down as much as you want, as long as it's at least 3.5 percent of the home's selling price.
Condos are eligible for 203(k) loans.
Condos are eligible, but they must be FHA-approved.
With a 203(k) loan, you must refinance once the renovations are complete.
The benefit of a 203(k) loan is that you only need to finance once, simplifying the renovation process.
A 203(k) loan works only for foreclosure or short sale properties.
A property does not need to be under foreclosure or in a short sale to qualify for a 203(k) loan.
Hiring a 203(k) consultant is required for the initial application, but the fee is small and will be included in your mortgage.
A 203(k) consultant is not required, but if you need assistance, you can roll the fee into your mortgage.
203(k) loans can be used to finance the construction of a freestanding addition to the original financed property.
Any new additions must be attached to the original structure if they are being paid for with the money from a 203(k) loan.
A 203(k) loan allows you to move an existing house that requires renovation to your property.
It seems crazy, but under the rules of a 203(k) loan, you are allowed to move an existing dwelling to your mortgaged property and then renovate it.
Adding a deck onto the property is considered a luxury addition that the 203(k) loan will not cover.
Although luxury items and renovations are not allowed, a deck is not considered a luxury item and may be built using 203(k) loan money.
203(k) loans can be used for paint and siding.
Paint and siding are both eligible improvements with a 203(k) loan.
If your doors do not have weather stripping, you must add both of these energy efficient features in order to use a 203(k) loan.
If weather striping is insufficient or non-existent, you must add them as part of the 203(k) energy conservation standards.
If you paid cash for your home, you can still take advantage of a 203(k) loan at any time by refinancing.
You can only refinance a cash purchase within six months of your purchase date.
Applying for a 203(k) loan will ensure you receive the lowest interest rate.
Loans are handled by your lending bank, and thus interest rates vary.
A 203(k) loan can be used to finance as much as $35,000 for renovations.
The streamline 203(k) loan allows you to finance up to $35,000 in repairs for non-structural renovations.
Existing construction has to be less than 1 year old to qualify for a 203(k) loan.
Existing construction must be at least 1 year old in order to be financed with a 203(k) loan.
If you do the renovation work yourself, you can pay your own labor wages out of your 203(k) loan.
You can save money and do the work yourself, but a 203(k) loan does not allow you to pay your own labor wages.
You can roll your 203(k) mortgage payments into your loan for up to one year to avoid making those payments in addition to your rent or another house payment while your renovation work is ongoing.
You can include some expenses in your 203(k) mortgage while construction is underway, but that includes only six months of mortgage payments, not 12.
You can use a 203(k) loan to finance the purchase of a house you will completely demolish to build a new structure on the same land.
If you plan to tear down a home and only reuse the land, you will not be approved for a 203(k) loan.
Mixed-use properties do not qualify for 203(k) loans.
There are many requirements to meet, but mixed-use properties may qualify for a 203(k) loan.
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