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FHA 203k Loan in Orange County, Florida

The property market is often unfriendly and unwelcoming to buyers in the low-to-moderate income brackets. High prices, strict mortgage eligibility requirements, and hefty down payments stick the average American into a renting cycle. Don't let this vicious cycle draw you in and spit you out. You, too, can realize your homeowning dream with the help of government-backed loan programs.

The FHA 203k loan program offers a cheap and affordable path to homeownership. The multi-purpose home loan provides the funds to buy a small or dilapidated home and upgrade it to fit your specific needs.

Dig in as we explore how an FHA 203k loan can help you realize your dreams of becoming a homeowner in Orange County, Florida.


What is an FHA 203k Loan?

An FHA 203k loan is a multi-purpose government-backed loan designed to help borrowers buy and renovate a home. The home loan is wrapped around repairing or rehabilitating a home. An FHA 203k is a construction loan that enables qualified borrowers to purchase and rehabilitate their primary residence.

The home loan targets to improve homeownership for households in the low-income brackets. Potential homeowners can use FHA 203k to purchase a fixer-upper and turn it into their dream home without taking out additional loans.

The logic behind this government-backed loan is simple. Almost a quarter of the homes in the US are between 60 and 70 years old. Most of these homes are in poor condition, so they're listed on the market at affordable prices. With an FHA 203k loan, you can buy a property in dire need of repair, fix it, and become a homeowner.

Unlike a conventional mortgage, an FHA 203k bundles the cost of buying and rehabilitating the fixer-upper into a single long-term loan. The program enables you to purchase and renovate your dream home with a single fixed or adjustable-rate mortgage. The loan amount covers the home's purchase and renovation costs, including labor and materials.

If need be, an FHA 203k loan may cover temporary housing costs when the duration when the home is under rehabilitation. You can roll up to six months of payments into the loan as your repair and renovate your dream home.

An FHA 203k loan saves you the hassle of applying for a mortgage and a home renovation loan that may be denied or carry higher interest rates.

Traditionally, lenders are jittery about financing homes in dire need of repair because they contradict their safety and livability standards. The federal government guarantee eliminates these concerns to enable you to buy and fix your home in one stroke.

According to the FHA guidelines, you must fully rehabilitate the home in six months. With an FHA 203k loan, renovating costs are included in the mortgage package and placed into an escrow account. The funds are disbursed to the contractor as they complete the work.


Eligibility for an FHA 203k Loan

An FHA 203k loan has similar requirements as an FHA loan in terms of credit score, FHA loan limits, income, and down payment.


Credit score and Down Payment

Your credit score is a critical consideration when applying for an FHA 203k loan because it affects the size of your down payment. Typically, these multi-purpose loans have a broad credit score range – 500 to 620. If your FICO score is between 500 and 579, you'll need to raise a 10% down payment to qualify for an FHA 203k loan.

However, borrowers with a credit score of 580 or higher can qualify for an FHA loan with a 3.5% home deposit. By comparison, you'd need a FICO score of at least 620 and a down payment of 3% to 20% to qualify for a conventional loan.

Any deposit lower than 20% attracts Private Mortgage insurance, a costly fee that tucks hundreds of dollars into your monthly payments.


FHA 203k Income Requirements

There are no income limits when applying for an FHA 203k home loan. However, you'll need to prove that you have a steady source of income for eligibility. Submitting W-2s, pay stubs, bank statements, and tax returns can help lenders verify your income history and income.


FHA 203k Debt-to-Income Ratio

Your debt-to-income ratio is a primary consideration as it affects your ability to repay the loan. Lenders may not offer a loan if you carry too much debt since you may struggle with the monthly repayments.

The FHA requires that you keep your monthly repayments lower than 31% of your gross monthly income. You'll need a DTI ratio lower than 43% to qualify for an FHA 203k loan.


FHA Loan Limits

Like all other loans under the FHA Loan Program, the FHA 203k loan has a limit. The FHA loan limit for Orange County, 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

Contingency Reserve

The lender may require that you reserve up to 20% of the repair costs as a contingency fund. That lets you handle any unexpected costs that arise during the rehabilitation process.


Other FHA 203k Loan Requirements

Since FHA 203k loans serve multiple purposes, they come with additional requirements about the home repair process.

  • You must hire a certified contractor to undertake the repairs. You can't undertake the repairs as a DIY project.

  • The contractors are paid in 1 to 5 draws, depending on the loan type, after completing each stage of the work.

  • Some loan types require a 10% holdback on all draws until the work is complete.

  • The repair work must begin within 30 days of closing the loan and should not stop continuously for a month.

  • All the repair works must be finished within six months of closing the loan, and the house deemed habitable.

  • The type of FHA 203k renovation loan you secure determines the repairs you can undertake in your new home.

  • You may use the home renovation loan to purchase a home in Orange County, Florida that's more than one year old.

FHA 203k Loan written on the paper sheet


Types of 203k Loans

You can choose from three FHA 203k loans when you wish to buy a home in Orange County, Florida. When purchasing a primary residence, you may only qualify for this government-backed home loan. While the home loan lets you buy a fixer-upper, you must hire an FHA 203k licensed contractor to undertake the repairs.

However, you may carry out the repairs and save money if you're a qualified contractor. However, the FHA loan program won't reimburse the labor costs.


The FHA 203k Standard Loan

The FHA 203k Standard loan is an ideal choice when buying a home that requires structural repairs, landscaping, or when the rehabilitation costs exceed $35,000. The cost of repairing the home you wish to purchase in Orange County must exceed $5,000 to qualify for the standard FHA 203k loan.

Save for the maximum FHA loan limit; you have no upper limit on the renovation budget. However, you'll be required to hire a certified contractor and a HUD consultant when undertaking the repairs. A HUD Consultant ensures your home meets the minimum property standards. They also ensure the contractor does a stellar job in line with the contract.

You may use a standard FHA 203k loan to carry out significant repairs, including:

  • Increasing windows sizes to make home bright and airy
  • Complete an attic or basement
  • Fix foundation issues
  • Install a retaining wall to combat flooding
  • Improve the floor plan
  • Repair a swimming pool
  • Remodel and upgrade the kitchen
  • Increase the home's square footage
  • Construct a garage

The FHA Limited 203k Loan

An FHA Limited 203k loan is used to buy a home that doesn't require extensive repairs. The multi-purpose loan is ideal for purchasing a home that requires cosmetic or non-structural work. The repair costs with a limited 203k loan are capped at $35,000.

You can't finance mortgage payments with a limited loan. You're not required to hire a HUD consultant when taking out the limited loan. However, you'll need to submit a completed written work plan demonstrating that you are under the contractor's bid.

Some of the repairs covered by a limited FHA 203k loan include:

  • Installing energy-efficient windows
  • Replacing kitchen and bathroom countertops
  • Redoing the flooring
  • Painting the home
  • Fixing and repairing the roof
  • Replacing the shows and bathtubs
  • Installing gutters and downspouts
  • Upgrading the HVAC, plumbing, and electrical system
  • Repairing the septic system
  • Replacing the sliding

HomeStyle Renovation Loan

A HomeStyle renovation loan is another government-backed home loan you can use to buy and repair a home in Orange County. With this loan, you can undertake structural and cosmetic repairs in your new home.

Like the rest of the FHA loans, a HomeStyle loan lets you finance home improvements through a first mortgage or refinance. You can use the HomeStyle loan for permanent repairs to the property.

A HomeStyle loan is crafted to help you get the most out of the home. If you're a homeowner, you can use this loan to repair and upgrade your property. The loan allows you to refinance your existing mortgage to lower rates and cover the upgrades.

It's a better option than relocating when you outgrow your current home. With this renovation loan, you can breathe new life into your tired property and upgrade it to your liking. You can also use it to expand the size of the home.

Some of the projects you can undertake with a HomeStyle loan include:

  • Increasing the home's square footage to suit growing family needs
  • Install new bathrooms
  • Install a new swimming pool

Why Use an FHA 203k Renovation Loan to Buy a Home in Orange County, Florida

Applying for an FHA 203k loan in Orange County is the perfect way to realize your homeowning dreams. On meeting all the eligibility requirements, you can borrow up to $420,680 to buy a home family home. You may also borrow up to $809,150 to buy a fourplex and become a landlord.

According to Homevalue.com, the median home in Orange County, Florida, sells for $260,759. That means you can scoop a fixer-upper property at a much lower price. With this renovation loan, you can close a dilapidated home and have enough money to fix it. Alternatively, you can buy an older home cheaply and use the loan to modernize it. Still, you can buy a small house and use the money to expand it to fit your family's needs.

You can also use an FHA 203K to refinance your existing mortgage. Like all government-backed mortgages, an FHA 203k loan carries low-interest rates. You can use the renovation loan to turn your current home into your dream house. With a careful choice of upgrades, you can build instant home equity even before moving into your new home.

Remodeling the kitchen, bathroom, and basement, updating the windows, landscaping, and exterior improvement are the most lucrative home updates. According to HGTV, you can recoup anywhere from 30% to 200% of every home remodel project if you pick them carefully.

An FHA 203k loan lets you move into your dream house. You have an opportunity to customize the space to suit your unique needs before moving in. You can ensure that every amenity in the home, from sidings to the color of the countertops, is to your liking before taking possession.

The renovation loan lets you build your dream home without expensive construction loans. With an FHA 203k renovation loan, you get the perfect home without falling into debt.


Top Desserts in Orange County, Florida

Besides letting you build a dream home without breaking the bank, Orange County is home to some of the best desserts in Florida. Here are some of the mouthwatering fares on offer when you need to indulge your sweet tooth:


Chocolate Pinata - Uncle Julio's

Uncle Julio's is an iconic spot-on I-Drive specializing in Mexican cuisine. The fajitas and guacamole are to die for, but the chocolate Pinata carries the day. This unique fare lets you whack a gigantic chocolate ball until it drops the loot, making it a fun and exciting experience. A server delivers a suspended choco ball on a wooden tray, and the intrigue ensues.

You then whack away at the sweet orb with sticks until it drops its delicious loot. You're left with a delightful mess of chunky chocolates, strawberries, churros, and pineapples. But you're not done yet. Dip each item from the treasure trove in the freshly made whip cream, strawberry, and caramel sauce and feel them melt in your mouth.


Potato Chip Crusted Chocolate Cake - Soco Thornton Park

Soco Thornton Park is a fancy establishment where southern hospitality pairs with contemporary cuisine to keep your taste buds tingling. Thornton Park carries an extensive dessert menu with delicious offerings such as S'more bread pudding, Bourbon Banana Pudding, and an artisanal selection of cheeses.

However, the Potato Chip Crusted Chocolate Cake is a famous fan favorite. It comprises a chocolate cake topped with potato chips, salted caramel, and peanut brittle. This wild dessert is a fantastic way to awaken your senses.


Andy's Famous Bread Pudding - Hash House a Go Go

Hash House a Go Go is a beautiful eatery with unusual menu items designed to keep the conversations flowing while sending your taste buds into overdrive. The cafe is out to twist farm food, creating a range of fun and delicious fare.

While almost every other dish is over the top, try Andy's Famous Bread Pudding. This is one of their unique sweets specially crafted to wow your mouth, impress your tongue, and tantalize your tastebuds.


Tableside S'mores - Bigfire Universal

Located at City Walk Orlando, Bigfire Universal is the perfect restaurant for a date night. The menu items will leave you stuffed, but be sure to make room for the tableside s'mores to crown your date night. Each serving is generous, creative, and diverse.

It creates the perfect excuse to poach your partner's creation without getting into trouble. The unmistakable ambiance and delicious goodies make for a memorable night out.


Kelly's Homemade Ice Cream

Why settle for the commercial variety when Kelly's Homemade Ice Cream can whip up a custom flavor just for you? Located on Corrine Drive, this ice cream shop lets you enjoy your homemade ice cream however you like – cups, cones, or scoops. Indulge in their homemade, mouthwatering waffles, sundae, and shakes in multiple flavors.

Chocolate, vanilla, strawberry, and more, the flavor offerings can be dizzying. Love fruits? The season fruit-based desserts are out worldly. Brownies, sorbets, and seasonal fruit ice creams will take your taste buds on a wild ride.


Get Your Dream House in Orange County, Florida Today

An FHA 203k puts your dream house in Orange County, Florida, within reach. With this multi-purpose home loan, you can buy a dilapidated home cheaply and remodel it into your dream house.

You can use the renovation loan to repair and upgrade the home to fit modern living standards without an extra loan. With an FHA 203k, you can build equity in your home right out the door.

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.

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