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203k loan
asked Sep 26 in FHA Loans by Leon
edited Sep 26 by GinaPogol

1 Answer

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Hello, Leon, and thank you for your question. It looks as though you are inquiring about the rate for an FHA 203(k) loan, which is the rehab / renovation type of FHA mortgage.

According to our average mortgage rates today, the standard FHA mortgage rate is 4.583 percent, but that does not include the required mortgage insurance premium (MIP). For an FHA home loan, that's 1.75 percent upfront (you can usually add it into your loan amount), plus an annual premium, which they divide into 12 and add to your monthly payment. For a 30-year mortgage  > 90 percent of the home's improved value, under $625,500, that's an additional .7 percent of the loan amount each year. All of this, plus loan fees, can easily bring the annual percentage rate (APR) to something closer to 5.75 percent. Our current average is 5.591.

And that is for the standard 203(b) mortgage. Considering the additional cost and effort that go into a 203(k) loan, the extra quarter point does not seem unreasonable. It is normal for 203(k) rates to run higher than 203(b) rates. https://themortgagereports.com/14946/fha-203k-loan-mortgage-lender-rates

Nor do I know what your credit rating, income and assets are. I will say this, however. If you can qualify for the Fannie Mae HomeStyle mortgage instead of the FHA product, you can probably save some money. Check out this article comparing the two and see if the Fannie Mae loan offers you a better deal.

https://themortgagereports.com/21895/fannie-mae-homestyle-vs-fha-203k-renovation-loan
answered Sep 26 by GinaPogol (44,900 points)
edited Sep 26 by GinaPogol
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