What type of loan does FHA(k) refer to?

The FHA(k) loan refers to an FHA rehab loan, specifically designated to provide financing for the purchase and rehabilitation of residential properties. This program allows buyers to incorporate the costs of repairs into their mortgage, facilitating the acquisition of homes that may need significant work to become livable or compliant with current standards.

The key aspect of the FHA(k) loan is its dual purpose: it not only covers the purchase price of the home but also adds the estimated cost of repairs and renovations. This is particularly beneficial for buyers interested in properties that require improvements, as it simplifies the financing process by rolling all costs into a single loan.

Other types of FHA loans, such as those specifically for first-time homebuyers, refinancing, or investment properties, do not encompass the same scope of funding for renovations. Therefore, the unique feature of the FHA(k) loan in providing funds for rehabilitation sets it apart from the other options presented.