Skip to content
Fact Checked by Experts

FHA 203k Loan in Clay County, Florida

Most people give up on their dreams of owning a home because they're priced out in most localities. Florida may have some of the country's most competitive property prices, but don't let that faze you. Some pockets of the sunshine state, such as Clay County, have plenty of affordable properties. With the help of an FHA 203k loan, you can even build your dream home without crippling monthly payments.

Unlike the regular FHA loans, the 203k loan lets you tap into the underserved market and purchase a lowly priced home needing some TLC. Dig in as we detail how you can join the growing list of property owners in Clay County. Florida with the help of an FHA 203k loan.

What are FHA 203k Loans?

FHA 203k Loans are low-interest, multi-purpose home loans guaranteed by the Federal Housing Administration (FHA). The mortgage enables you to purchase or refinance a home that needs repairs or an upgrade and roll the rehabilitation costs into the mortgage. The loan covers the cost of buying a home and the cost of upgrades to let you pay for the renovations over time as you repay the mortgage.

An FHA 203k home loan expands your home buying options when looking to own a home in high-cost areas. This loan lets you take a different approach when everyone else is jostling to get the best property in Clay County. It enables you to purchase a rundown property and turn it into your dream home before residence.

Like all FHA loans, the 203k renovation loan features low-interest rates and lenient qualification requirements.

The FHA 203k loan program is part of the federal government's initiative to improve homeownership in low-to-moderate income households. The logic behind this loan program is simple. Almost 30% of the homes in America are more than 50 years old.

Most of them lack modern amenities, are in poor shape, and therefore list lower on the price spectrum. People in the lower income brackets can easily buy these affordable properties and become homeowners.

By rolling the construction costs into the mortgage, an FHA 203k loan saves you the need to take out an expensive renovation loan. Eligible borrowers must renovate and rehabilitate the home before taking residence. You must complete all the repairs within six months of closing the renovation loan.

One of the perks of using an FHA 203k loan to buy a home in Clay County is that you can finance the first six repayments into the mortgage loan while you renovate the house.

The government-backed guarantee entices conventional lenders to waive their stringent requirements. It gives them the confidence to lend to people they consider high-risk borrowers. FHA loans are highly favored by borrowers in the low- to moderate-income brackets because they carry friendly terms.

While the renovation costs are included with the mortgage, they're often disbursed into an escrow account. The money is paid in one or more draws as the completes the work.

Eligibility for an FHA 203k Loan

Since an FHA 203k is a subtype of the FHA loan program, it has similar mortgage requirements as a regular FHA mortgage. That means lenient qualification requirements, affordable interest rates, and FHA loan limits.

Credit Score and Down Payment

FHA loans are far more accommodating to people with bad credit scores. You can qualify for an FHA 203k loan with a credit score of at least 500. But there's a close tie between your credit score and the size of your down payment.

To qualify, borrowers in the 500 to 579 credit score range must raise a 10% home deposit. If your FICO score is 580 and higher, you only need to raise 3.5% of the loan value as a down payment. Florida features robust down payment assistance programs to help you raise the deposit when buying a home in Clay County.

FHA 203k Loan Limit

Like any FHA loan, the 203k home is subject to a county limit, and the total amount varies across various properties. The FHA 203k loan limit for Clay County in Florida ranges from $420,680 for a single-family home to $809,150 for a fourplex.

  • Single-family home - $420,680
  • Duplex - $538,650
  • Tri-plex - $651,050
  • Four-plex - $809,150

Debt-to-Income Ratio

The debt-to-income ratio measures how much debt you carry and is a primary consideration for an FHA loan. You can only qualify for an FHA 203K loan if your monthly payments are lower than 31% of your gross monthly income.

You'll have difficulty qualifying if your DTI is higher than 43%. Lenders will shy away if you're carrying too much debt since it might affect your ability to make regular repayments.

FHA 203k Income Requirements

While the FHA loan program doesn't have an income limit requirement, you must prove that you're gainfully employed.

You must convince your preferred lender that you have a steady source of income to qualify. W-2s, bank statements, pay stubs, and tax returns can help verify your income and employment history.

Contingency Reserve

Some lenders may require that you set aside 20% of the renovation costs as a contingency. The contingency fund lets cater to any emergency during the home rehabilitation process.

If an emergency doesn't arise, you may use the money to pay down the mortgage or upgrade your home.

Additional FHA 203k Loan Requirements

Since an FHA 203k is a highly specialized home loan, it has additional requirements to govern the rehabilitation process.

  • Only certified contractors can handle the home repairs. But you can act as your contractor if you're a trained and certified general contractor.

  • The construction fund is disbursed in 1 to 5 draws, depending on the type of 203k mortgage loan.

  • Some 203k loans require a 10% holdback on all draws until the contractor finishes rehabilitating the home.

  • You commence the home repairs within 30 days of closing, and the works mustn't stop for 30 consecutive days.

  • You must finish all the home repairs within six months of closing an FHA 203k renovation loan.

  • The scope of home repairs depends on the type of 203k loan you secure.

  • You can only use the FHA 203k loan to purchase a more than a year old property.

A person holding a renovation loan agreement and model home

Types of 203k Loans

You can choose between three FHA 203k loans when buying a home in Clay County, Florida. Naturally, you can only use this multi-purpose home loan to purchase your primary residence.

The FHA 203k Standard Loan

The FHA 203k standard loan is the most flexible of the three 203k loans. It enables you to buy a home in dire need of repairs and turn it into your dream home. The loan covers the cost of carrying out structural repairs, non-safety-related landscaping, or when the cost of fixing the home exceeds $35,000. You may apply for the standard FHA 203k loan when the cost of repairs exceeds $5,000.

A standard FHA 203k loan is popular because it gives latitude when rehabilitating your new home. There's no limit to how much money you can use to rehabilitate and modernize your home. The size of your home mortgage and the cost of the house are the only limiting factors to your renovation budget.

However, you must hire a certified contractor and a HUD consultant when rehabilitating a home. A HUD consultant holds the contractor accountable and ensures the property adheres to the necessary property standards.

Some of the major repairs you can handle with an FHA 203k loan include:

  • Installing bigger windows
  • Rehabilitating a basement or attic
  • Fixing problems with the foundation
  • Installing a flood wall in a flood-prone area
  • Alter the existing floor plan
  • Renovate a swimming pool
  • Upgrading and remodeling the kitchen
  • Increasing the size of the home
  • Install a garage

The FHA Limited 203K Loan

An FHA limited 203k is a renovation loan that lets you buy and fix a home that doesn't require significant repairs. You can use this loan to buy a home that requires non-structural or cosmetic repairs. Typically, you should apply for the limited 203k if the repair costs won't exceed $35,000.

Since the repair works aren't as extensive, you aren't required to hire a HUD consultant when using a limited 203k loan to rehabilitate your dream home. However, you'll need to hire a certified contractor and submit a work plan indicating that you understand the contractor's bid. You may not finance mortgage payments with a limited 203k loan.

Non-structural repairs covered by an FHA 203k loan include:

  • Installing energy-efficient windows
  • Refinishing the flooring
  • Remodeling the kitchen and bathroom countertops
  • Repairing a faulty roof
  • Painting the house
  • Installing gutters and downspouts
  • Improving the home's septic system
  • Upgrading the home's HVAC, plumbing, and electrical systems
  • Replacing worn sidings

The HomeStyle Renovation Loan

You can use this government-backed mortgage to buy and rehabilitate a home in Clay County, Florida. You can use a HomeStyle renovation loan to turn a dilapidated property into your dream home. The loan covers the cost of repairs through a primary mortgage or a refinance. Unlike other 203k loans, the HomeStyle renovation covers structural and non-structural repairs.

As the name suggests, the loan is designed to help create a living space that suits your lifestyle. You may use this loan to complete your home's permanent repairs and upgrades.

You may use a HomeStyle loan to undertake diverse repairs, including:

  • Increasing the size of your new home
  • Installing new bathrooms to avoid the inconvenience of sharing
  • Installing a new in-ground swimming pool
  • Buying new kitchen appliances
  • Updating the fixtures in the home
  • Rehabilitating a well
  • Creating an open floor plan
  • Improving the home's curb appeal

Refinancing your home with a HomeStyle loan is an ideal way to upgrade your lifestyle without shifting residence. If you outgrow your current home, you can use the renovation loan to finance the upgrades.

You can use it to increase the home's square footage, install additional bathrooms, or any remodel to have it match your growing needs. Breathing new life into your current home is more preferred than moving to a new location.

Why Buy a Home in Clay County, Florida with an FHA 203k Loan

While the FHA loan program is designed to help low-income earned become homeowners, the 203k gives you a distinctive edge. It gives you the funds to buy and fix a rundown property and turn it into your dream home. Since fixer-uppers often fetch lower prices on the market, you can use the rest of your budget to upgrade the home to your liking.

Because the 203k loan requires you to work with a certified contractor, you're guaranteed solid results within six months. Contractors value their 203k status and can't risk shortchanging you. If you settle for a standard FHA 203k loan, you'll have a HUD consultant overseeing the entire project.

If you're careful with the property choice, you can use the FHA loan to build a steady stream source of income. Instead of a single-family home, you can use this loan to buy a duplex, triplex, or fourplex. You can lease the extra unit at or above the market rate and earn rental income to renovate the property. Depending on the home's location, size, and amenities, you may generate enough rental income to pay off the FHA loan. Essentially, you can have the property pay for itself.

According to Homevalue, the average selling price for homes in Clay County is $181,773, which is well below the County's FHA limits of $432,400. You can use the remaining funds to renovate and upgrade the property and build instant equity in the home. Or update the property with well-appointed appliances and amenities to attract premier renters. With many people moving into the sunshine state each year, you'd have no trouble landing great tenants.

With an FHA 203k renovation loan, you can put the renovation towards the most lucrative home upgrades. Remodeling the bathrooms, kitchen, and basement and updating the home's appliances, landscaping, and curb appeal generate the most significant return on investment. You can recoup between 30% to 182% of your investment from your choice of home upgrades.

An FHA 203k loan lets you build your dream home without sticking you with expensive repair bills. All the home repairs are rolled into your affordable monthly payments. You can customize every inch of the house in Clay County to suit your unique lifestyle when you apply for an FHA renovation loan.

Best Desserts in Clay County, Florida

An FHA 203k loan lets you buy a dream home in Clay County without saddling you with an expensive mortgage. That leaves you with a disposable income to treat your family to some of the local offerings.

You can indulge your sweet tooth by checking out the best desserts and dessert spots in Clay County, Florida.

Cupcakes - Yum A Southern Market

Moist, delicious, flavorful, moist, and generously sized, these reasonably priced cupcakes will send your sweet tooth into overdrive. The cupcakes from Yum A Southern Market come in different tantalizing flavors that will leave your tastebuds tingling and craving more. They come in all flavors you can imagine, strawberry, red velvet, chocolate, lemon, raspberry, and more.

A trip to this bakery will leave you feeling like a kid the candy because of the delicious, mouth-watering goodies on offer. Other mouth- watering treats include cakes, cookies, brownies, macarons, and snickerdoodles.

Vegan Desserts - La Dulce Bakery

La Dulce Bakery is the go-to spot when you need delicious, mouth-watering treats that hit the right spot. You're in for a treat from cinnamon rolls, salted brownies, macaroons, cheesecake, and everything in between.

The bakery also offers traditional pastries that take your tastebuds on a wild ride. Keep an eye out for the cakes and treats that rotate with the seasons. Other popular menu items include traditional pastries, artisan bread, and coffee to fill your sweet cravings.

Delicious Cakes - Brew-Bakers Café

If you're in the mood for cake – cheesecake, chocolate, carrot, lemon cake – head down to Brew-Bakers Café. Their cakes are worldly, moist, flavorful, and delicately balanced to melt in your mouth.

Some cake varieties, such as chocolate raspberry, peanut butter cheesecake, and upside-down pineapple cake, will take your tastebuds on a wild, delicious adventure. Other popular menu items include sandwiches, wraps, pies, and soups.

Italian Cookies - Addette's Bistro & Bakery

Head over to Addette's Bistro & Bakery when you're ready for freshly-made cookies. Like every Italian delicacy, these cookies will melt in your mouth, and the texture will have your tongue and tastebuds working overtime.

Have your pick from the chewy Italian Pignoli cookies that are crisp on the outside or the light, nutty, and buttery wedding cookies.

Every pastry in this bistro and bakery is made from scratch using fresh ingredients and is free from preservatives. Other popular menu items include bread, pies, signature cakes, bars, and more.

Glazed Donuts - Amanda's Traditional Bakeshop

If you're in the mood for a Krispy Kreme-esque glazed donut to start your day on the right note, check out Amanda's Traditional Bakeshop. Donuts have never tasted this good.

The donuts are big and bouncy, striking the delicate balance between chewiness and melt-in-your-mouth goodness and sweetness.

Other popular menu items in this delightful bakery include almond cookies, pumpkin maple pastry, karma cookies, and croissants.

Become a Homeowner in Clay County, Florida Today

Low income and poor credit scores are no longer obstacles in your homeowning journey. You can easily apply for an FHA 203k loan and join the growing ranks of homeowners in Clay County, Florida.

This multi-purpose renovation loan lets you buy an affordable fixer-upper and provides the rehabilitation funds as a single loan. You can buy a small or cheap house and upgrade it to suit your needs without incurring too much debt.

With over 50 years of mortgage industry experience, we are here to help you achieve the American dream of owning a home. We strive to provide the best education before, during, and after you buy a home. Our advice is based on experience with Phil Ganz and Team closing over One billion dollars and helping countless families.

Find The Right Mortgage

For more than 20 years, Phil have been helping customers achieve their home purchase and refinance goals by providing them with invaluable resources and support.

Schedule a FREE Consultation
Phil Ganz

Subscribe to Get Your First Time Homebuyer Checklist

Sign up for the weekly newsletter to stay up to date on the latest real estate market trends, loan news, and so much more!