If you’re planning on flipping or investing in properties for profit, you will most likely need to repair and upgrade them to make them more accessible and desirable. Many recommend obtaining a rehab loan or FHA 203(k) loan to fund the project. These loans allow investors to finance the purchase or renovation of a property through one single payment.
But what types of properties qualify for a rehab loan? This article will help identify what renovations, properties, and qualifications are required for a rehab loan.
What Can You Use a Rehab Loan For?
You can use a rehab loan to buy and renovate a property. Many investors use this loan to help fix up properties to increase their value. Some of these upgrades include the following:
- Structural modifications
- Septic system improvements
- Kitchen and bathroom upgrades
- Appliance replacement
- ADA compliance upgrades
What Type of Properties Qualify?
What kinds of properties qualify for rehab loans? You may be surprised that fixer-uppers are only some of the properties you can renovate using an FHA 203(k) loan.
Other types of properties include:
- Construction property
Properties financed with rehab loans must meet all security, safety, and livable requirements. This means that each property, no matter the type, must have a roof, water, electricity, and heaters, and the property shouldn’t have any physical deficiencies.
How To Qualify for a Rehab Loan
Before applying for an FHA 203(k) loan, it’s always best to evaluate your options and understand the requirements to qualify. You should also clearly understand what you’ll use the loan for so you can put down an appropriate asking amount when filling out the application.
To qualify, you need the following:
- A credit score above 500
- 31/43 debt-to-income ratio
- No recent blemishes on your credit history
Before applying for a rehab loan, you should know what properties qualify and if this is a financial decision you want to make. At Val Chris, we offer rehab loans for investors. If you have any questions or need help making the best decision for you or your business, contact us at Val-Chris Investments to inquire how we can fund your next renovation project.