How Much Will the FHA 203k Cost?
Financing home improvements can seem scary to new home buyers and current homeowners wanting to upgrade. One of the first questions asked is "How much will it cost?" It's an important question, no doubt. Since there isn't a "one size fits all" answer, let's look at some scenarios.
In general terms, the FHA 203k loan will add about $6 per month to your mortgage payment for every $1,000 in projects you finance. So if you're looking at a $20,000 kitchen renovation project, you'll add about another $120 to your monthly house payment. The total amount of course depends on the house payment, but you can figure that out based on the $6/$1,000 figure.
This home remodeling option isn't just for new buyers (although it's awesome to get your dream house with a 203k, using your style, wants and needs). A refinance and remodel situation will run down about the same. In this case, you can use the FHA 203k to pay off your existing mortgage (based on the appraised value) and pay for home improvements so it's all in one mortgage. How much the FHA 203k costs will of course depend overall on the home value you're borrowing and the projects, but it works the same with the $6 a month for every $1,000 you finance.
Again, a $30,000 major renovation project (a new bathroom, kitchen upgrade and deck) will add an additional $180 or so to your house payment. But imagine how much you can upgrade with that much money. Financing all of those projects with a credit card or short-term home equity line of credit would cost a lot more than that each month.
Download "The FHA 203k Survival Guide" at the button below to learn more about this home improvement financing option. The free guide offers information and tips all focused on the 203k including the difference between a 203k Streamline and the Full 203k, and what's covered by the loan. Get your copy today.
(money: Flickr user Daniel Borman)