FHA loans are categorized by how the Federal government insures the loan. 203k is used when a buyer wants to roll some repairs into loan. Generally the buyer has to pay a inspection fee for draws on the loan as work is completed.
From Hud website:
203k Rehabilitation Mortgage Insurance
Streamline 203(k) Mortgage
The “Streamline”(K) Limited Repair Program permits homebuyers to finance an additional $35,000 into their mortgage to improve or upgrade their home before move-in. With this product, homebuyers can quickly and easily tap into cash to pay for property repairs or improvements, such as those identified by a home inspector or FHA appraiser. More…
203(k) Mortgage
The Section 203(k) program is HUD’s primary program for the rehabilitation and repair of single family properties. As such, it is an important tool for community and neighborhood revitalization and for expanding homeownership opportunities. To find out how you can become a 203k consultant, readHUD Mortgagee Letter 00-25 and How to Become an Approved 203k Consultant.
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