What All You Require To Qualify For A Rehab Loan
Posted by Michael Griffin on October 24th, 2019
On the market for a new house? But looking for a place that’s a fixer upper of sorts so the money you save from the loan can be spent on beautification and repairs? Then a rehab loan is the perfect match for you. Any rehab loan or 203k as it is more popularly known as, is a loan that combines your need to buy a house and renovating it into one and present you with the interest and payment plan accordingly, thereby eliminating your need to dive into your savings or spend time in the hassles of arranging another loan for repairs and other such tasks.
This is a situation where a lot of families or individuals find themselves in over time. It could be due to any one of multiple reasons, ranging from starting a family to moving to a better neighborhood among others. Either way, no matter what your reasons, a rehab loan in Denver or wherever you require this undertaking, is a one stop fix for all of them. This implies you can get the money for both tasks, namely the purchase and renovation of the house you wish to take over from one lender instead of running around and wasting time with two different loans and separate payments with their own interest rates.
Such a loan has it benefits but before you do opt for one, you should know everything there is about such a loan to better help with your judgement. Read on below to know more about whether you will be eligible for it or not.
Eligibility Criteria
1. Minimum credit score for eligibility ranges from 620 - 640 which will depend on the lender. So it is in your best interest to have a credit score higher than this range for a better impression and chance at acquiring the loan.
2. The lender you seek out must be approved by the Federal Housing Administration(FHA). This is important since the norms they follow and employ will be approved and they must stick to them in order to operate under the FHA.
3. There should be no history of any foreclosure or bankruptcies, preferably never but in this case the minimum requirement is 36 months. Having no such misdemeanors on your credit sheet helps improve your chances of grabbing the loan by a big margin.
4. To ensure you have a steady income source and that you will be able to repay this loan, you employment history will be looked over to verify the details you present to the lender. Hence it is a big bonus if your past employment is at successful organizations with steady promotions along the way.
5. Along with your employment history, you will also need to show you are currently employed in order to regularly make the payments for the loan taken. This will require you to present a document from your firm station you are a part of their organization along with salary slips from the previous 3 months.
6. With employment comes income, and from income comes income tax. One will need to present income tax receipts or proof for the past two years to qualify for such a loan.
This is important since filing taxes in the designated timeframe and not missing will help you in this endeavor but also improve your credit score for any future financial undertakings.
7. What is seen as a major advantage of such a loan, you will only need to put down a meager 3.5% of the entire sum being loaned to you as a downpayment to essentially complete this process. This certifies you have finances and from the accounts you have shown while filing taxes.
