When searching for a home in Connecticut, many buyers have a specific list of things they want or need in a home. It isn’t always easy to find all of those items in a home and compromises need to be made. An alternative option is to purchase a home that lacks a few key features and renovate or remodel the home. This options allows a buyer to turn essentially any home into their dream home. Thanks to loans such as the FHA 203k loan, these types of projects are easier than ever. Bank of England Mortgage offers FHA 203k loans throughout Branford and all of Connecticut.
An Connecticut FHA 203k loan is a unique mortgage product that allows you to combine both the purchase of a home as well as the costs of repairs or renovations into a single mortgage. CT FHA 203k loans are backed by the Federal Housing Administration which makes them accessible to many borrowers given their low down payment requirements and interest rates. Borrowers tend to be less intimidated by renovation and remodeling projects when they can easily consolidate the purchase of a home and the cost of updates into a single mortgage. Additionally, less money is required up front and money can be saved at closing because costs are limited when only one loan is needed.
There are two types of Connecticut FHA 203k home loans available depending on the size of the project. There is a standard FHA 203k loan which is used for larger projects that may require structural work and a Streamline FHA 203k that is used for smaller, less complex projects.
Connecticut FHA Standard 203k – The standard 203k is designed for large, more complex renovations that involve structural work, remodeling, or construction that prevents the buyer from occupying the home during renovations. A minimum of $5,000 in renovation costs are required for the standard 203k.
Connecticut FHA Streamline 203k – The Streamline 203k program is for smaller projects that will not exceed a total of $35,000. This option is used for homes that may need new appliances, new roofing, energy conservation improvements, and other non-structural repairs.
Much like the standard Connecticut FHA loan program, FHA 203k loans are often favored over similar programs due to their relaxed credit and low down payment requirements. In most cases, a credit score of 580 and a down payment of only 3.5 percent are the minimum requirements. If you do not have the minimum down payment requirement on hand, this can even be gifted by family members.
Branford CT FHA Loan Requirements
- Credit Score – A credit score of 580 or higher will be generally be required.
- Income Requirements – A debt-to-income ratio of 43 percent or less is standard. Up to 50 percent can be approved in special cases.
- Down Payment – Minimum of 3.5 percent of the purchase price.
- Up-front Mortgage Insurance Premium (MIP) of 1.75% of the purchase price.
- Recurring MIP based on factors such as loan amount, LTV ratio, length of the mortgage.
The maximum loan amount available for an Branford FHA 203k loan is limited by county. For the FHA 203k loan, this is the combination of the home price and estimated repairs.
If you are like many Connecticut homebuyers, you may be struggling to find everything you need in a home. Bank of England Mortgage can help you turn any home into your dream home with a Branford FHA 203k loan. Contact us today for more information on 203k loans or to begin the pre-qualification process!