203(k) loan

203(k) loan

Also called a HUD rehabilitation and repair loan, it is an FHA-insured loan obtained through independent lenders.Single-family to four-unit residential properties are eligible,as well as mixed-use properties with certain ratios of residential to commercial uses.Rehab money can be used for normal repairs or improvements, or to convert a single-family home to a multifamily dwelling (up to four units) or the reverse. Homes that have been demolished, or will be razed as part of the rehab,are eligible as long as some of the foundation structure remains.The maximum loan amount is 110 percent of the value of the property after rehab.(Do not confuse this type of loan with HUD's property improvement loan,also called a Title I loan.)

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.