How much down payment do you need for a 203k renovation loan?

How much down payment do you need for a 203k renovation loan?

One of the biggest advantages of the FHA 203k is the low down payment. Most families only need 3.5 percent down.

Here is how it works. If your credit score is 580 or higher, you can put down just 3.5 percent of the total loan amount. That total loan amount includes both the purchase price of the house and the cost of the renovations. So your small down payment actually covers the whole project.

If your credit score is lower, the required down payment could rise to 5 or 10 percent depending on the lender and your full financial picture. Always talk with an experienced 203k lender to get exact numbers based on your credit, income, and the specific property.

You also have the option to put down more if you want. Some families choose to put 20 percent down to reduce or avoid certain mortgage insurance costs and lower their monthly payment. This is completely optional and depends on how much cash you have available.

The low down payment option is why so many first time buyers and growing families choose the 203k. It lets you buy a fixer upper and finance the repairs without needing a huge amount of cash upfront.

Keep in mind you will still need some extra money at closing for fees and other costs. The best next step is to speak with a 203k lender early so they can run your exact numbers and show you all your options.