Renovation Mortgage 203(k)
Joann Ton
LOAN OFFICER
NMLS# 1461031
Renovation Mortgage 203(k) Topics Covered
- What is a 203(k) Renovation Mortgage?
- Limited vs. Standard 203(k) Renovation Mortgages
- How to Qualify for a 203(k) Renovation Mortgage
- The Renovation Mortgage 203(k) Process
- Renovation Mortgage 203(k) FAQs
What is a 203(k) Renovation Mortgage?
A jumbo home loan, also known as a jumbo mortgage, is a type of financing that exceeds the limits set by the Federal Housing Finance Agency (FHFA). Although they are nonconforming mortgages, jumbo loans still must fall within the guidelines of what the Consumer Financial Protection Bureau considers a “qualified mortgage”.
Jumbos are considered riskier for lenders because they can’t be guaranteed by Fannie Mae and Freddie Mac, meaning the lender is not protected from losses if a borrower defaults.
Jumbos are considered riskier for lenders because they can’t be guaranteed by Fannie Mae and Freddie Mac, meaning the lender is not protected from losses if a borrower defaults.
Limited vs. Standard 203(k) Renovation Mortgages
Documentation Needed to Get a Conventional Mortgage
- Proof of income and assets.
- Employment verification
- A driver’s license/state ID card.
- A valid social security number.
Other Requirements
- Proof of income and assets.
- Employment verification
- A driver’s license/state ID card.
- A valid social security number.
Down Payment
The requirement for a down payment can vary based on your personal circumstances and the kind of loan or property you’re getting. First-time home buyers in Los Angeles have the possibility of acquiring a conventional mortgage with a down payment as low as 3% through financial assistance programs.
- Proof of income and assets.
- Employment verification
- A driver’s license/state ID card.
- A valid social security number.
Frequently Asked Questions
Is the 203k program allowed for use by investors?
Jumbo mortgage loan amounts exceed the current maximum dollar amount guaranteed by GSEs. This amount can vary a little from state to state when you consider high-priced or luxury markets.
Can an energy efficient mortgage (EEM) be used in conjunction with the 203k?
You are not limited to a 30-year fixed rate program with a jumbo mortgage. Many people choose an adjustable rate mortgage (ARM) program to take advantage of a lower interest rate and lower monthly payment.
If my credit score is low, how can I raise it?
Not necessarily. In the past, jumbo loans generally had higher interest rates than conforming loans. However, jumbo rates are ever changing and may be higher or lower than conforming rates as of late.
Is there a time limit for the renovation?
Paying your bills on time, reducing your credit balances, and trying to not apply for credit too often are all ways that you can raise your FICO score.
A jumbo loan can be a great fit for Los Angeles homebuyers who are in a strong financial position and want to secure a large loan. But just because you may qualify for one of these loans doesn’t mean you should take one out.
Due to the size of the loan, as well as the lack of government insurance, lenders assume greater risk with these mortgages. And if you’re not looking to buy a higher-priced home, or you feel unprepared to take on a substantial, long-term financial commitment, you should probably rethink getting a jumbo home loan.
As always, you should borrow with care and crunch the numbers carefully to see what you can truly afford and what kinds of benefits you will receive from a loan like this. It’s a good idea to compare terms to see if taking out a smaller conforming loan, plus a second loan, instead of one big jumbo, might prove better for your finances in the long haul.
A jumbo loan can be a great fit for Los Angeles homebuyers who are in a strong financial position and want to secure a large loan. But just because you may qualify for one of these loans doesn’t mean you should take one out.
Due to the size of the loan, as well as the lack of government insurance, lenders assume greater risk with these mortgages. And if you’re not looking to buy a higher-priced home, or you feel unprepared to take on a substantial, long-term financial commitment, you should probably rethink getting a jumbo home loan.
As always, you should borrow with care and crunch the numbers carefully to see what you can truly afford and what kinds of benefits you will receive from a loan like this. It’s a good idea to compare terms to see if taking out a smaller conforming loan, plus a second loan, instead of one big jumbo, might prove better for your finances in the long haul.