Best 203(k) Rehab Mortgage Lenders in 2022

If you’re buying a home that needs work, you can get financing for the purchase and renovation with an FHA 203(k) loan, also known as a rehabilitation loan. This type of FHA loan keeps things simple with one loan, one set of closing costs, and one monthly mortgage payment. Here’s Bankrate’s guide to the best 203(k) rehab mortgage lenders in 2022.


Methodology

To determine the best FHA 203(k) rehab mortgage lenders, Bankrate evaluated lenders based on several criteria, including affordability (APR, rebates, and/or incentives); scope of loan offers; Customer reviews; and online capabilities.


Best FHA 203(k) Rehab Mortgage Lenders

Guaranteed rate

Guaranteed Rate Mortgage Review

Loan products Purchase and refinance, conventional, jumbo, FHA, VA, USDA, renovation loans, interest only
Credit requirements 620 for conventional and FHA loans; 580 for VA loans
Advantages
  • Simplified digital experience
  • 350+ locations nationwide for in-person support
  • Interest rates posted online and updated daily
  • Ranked among the top 3 retail mortgage lenders by Scotsman Guide
The inconvenients
  • Home equity loan products not available
  • Higher credit score requirement for FHA loans
Highlight Rate Guarantee offers homebuyers a convenient digital experience paired with live human assistance.

Flagstar Bank

Flagstar Bank Mortgage Review

Loan products Purchase and refinancing; conventional, jumbo, FHA, VA, USDA, home equity loans, construction and renovation loans
Credit requirements 620 for conventional loans; 700 for jumbo loans; 580 for FHA loans
Advantages
  • Offers several government guaranteed loan products at competitive rates
  • “Destination Home” mortgage with no down payment and flexible eligibility criteria
  • Get up to $5,000 for closing costs or your down payment with the Flagstar Gift Program
The inconvenients
  • Lender fees are not disclosed online
Highlight Flagstar Bank offers grants and down payment assistance programs to help you realize your dreams of home ownership.

LoanDeposit

LoanDepot Mortgage Review

Loan products Purchase and refinancing; conventional, jumbo, FHA, VA, construction and renovation loans
Credit requirements 620 for conventional loans and VA loans; 700 for jumbo loans; 580 for FHA loans
Advantages
  • Available in all 50 states
  • Over 1,700 licensed loan officers nationwide for customer support
  • Accredited by the Better Business Bureau (BBB) ​​with an A+ rating
The inconvenients
  • USDA loans and home equity loan products not available
  • Fee schedules and interest rates not listed on lender’s website
Highlight LoanDepot is a direct mortgage lender offering competitive rates on a range of products.

Fairway Independent Mortgage Company

Fairway Independent Mortgage Company Review

Loan products Purchase and refinancing; conventional, jumbo, FHA, VA, USDA; construction and renovation loans, reverse mortgage, doctor loan
Credit requirements Unavailable
Advantages
  • Over 400 branches across the United States
  • Extensive library of resources for homebuyers
  • BBB accredited with an A+ rating
The inconvenients
  • Home equity loan products not available
Highlight Among its offerings, Fairway Independent Mortgage Corporation offers programs that cater to low- and moderate-income borrowers.

Homebridge Financial Services

Homebridge Financial Services Mortgage Review

Loan products Purchase and refinancing; conventional, jumbo, FHA, VA, USDA, construction and renovation loans, investment property, reverse mortgage
Credit requirements 640 for conventional loans; 680-700 for jumbo loans; 580 for FHA loans, VA loans, and USDA loans
Advantages
  • Variety of purchase and mortgage refinance products to choose from
  • User-friendly online portal to track the status of your loan application
  • Excellent rating on Trustpilot
The inconvenients
  • Home Loans Not Offered in Utah
  • Not accredited by the BBB
Highlight With Homebridge, borrowers benefit from personalized support from local loan originators throughout the financing process.

What is an FHA 203(k) Rehab Loan?

The FHA 203(k) loan is a type of mortgage loan backed by the Federal Housing Administration for buyers who are looking to renovate the home they are buying. 203(k) loans tend to have more competitive rates and require a smaller down payment and lower credit score compared to other types of loans. Like other FHA mortgages, 203(k) loans require you to pay a mortgage insurance premium with your monthly loan payment.

How does a 203(k) loan work?

A 203(k) loan consolidates your mortgage and home improvement funds into one loan. Once you take out the loan, a portion of the loan proceeds goes to the seller of the home and the remaining balance goes towards renovations.

To qualify for a 203(k) loan, the home must be at least one year old and the renovation costs must be at least $5,000. Additionally, the amount borrowed cannot exceed the area’s FHA loan limit, the home’s value after renovation, or its value before renovation, whichever is lower.

You also cannot use a 203(k) loan for just any project. You will need to comply with the requirements for qualifying renovations, which include replacing the roof and floors, improving the house for accessibility reasons, or improving energy efficiency.

Who qualifies for a 203(k) loan?

If you are interested in a 203(k) loan, you will need to meet the same requirements for a standard FHA loan:

  • A minimum credit score of 580
  • A debt to income ratio (DTI) of 50% or less (individual lenders may have higher or lower requirements)
  • The house is your primary residence and passes inspection once the renovations are complete

Summary: Best FHA 203(k) Rehab Mortgage Lenders

With additional reporting by Allison Martin

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