HUD's 203(k) program

HUD's 203(k) program offers low interest charges for borrowers who purchase a property that is in need of repair. HUD's program is within the FHA insured program. The FHA guarantees funding that is serviced by a conventional lender. These lenders must use a home improvement loan rate that the federal government allows. A borrower with bad credit may receive a higher interest charge, but there is a limit to the interest increase, and if the borrower's credit score is too low, they will be denied before receiving an extremely high charge, unlike with conventional financing. FHA interest charges can also be variable in nature. A variable interest charge begins as fixed for a predetermined number of years. Once the specified time frame has expired, the interest charge will either increase or decrease to meet the current market housing index. There is also a limit placed on variable home improvement loan rates that state how high and how low an interest charge is allowed to adjust (typically 2- 3 percentage points).