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FHA 203k Renovation Loans.
3.50% Down, 6% Seller Closing Credit Allowed
Flexible credit score requirements, with credit scores down to 580
FHA 203k Loan Program Benefits:
- The FHA 203k Loan program allows eligible borrowers to create one loan amount, that includes a repair escrow budget to finance renovation and rehab projects, which when:
- Purchasing a house can be combined with the purchase price, up to 110% of the appraisal report “after-completed value”
- Refinancing an existing mortgage can be combined with the current mortgage payoff amount, up to 97.75% of the appraisal report “after-completed value”
- Repairs and renovations are made after settlement, so there will be no delays on a transaction closing due to appraisal mandated repairs
- Greater appraised value, as the FHA 203k Appraiser will determine the property value based on the “after-completed value” Vs. the current “as-is value”
- Flexible credit requirements, with credit scores down to 580
- Safe, secure 30 Year fixed rate mortgage
- Seller closing cost help up to 6% of the purchase price
- Most property types allowed
FHA 203k Loan Qualification Requirements:
- On purchase transactions, combined purchase price and 203k renovation budget cannot exceed 110% of the “after-completed value” based on the appraisal report
- On refinance transactions, combined purchase price and 203k renovation budget cannot exceed 97.75% of the “after-completed value” based on the appraisal report
- 203k Loan amount can’t exceed FHA county loan limits
- Renovations must be completed within 6 months of closing
- A third-party contractor must complete all 203k repairs
- Appraisal deficiencies must be repaired through the 203k Loan renovation process
- 203k Contractor must be licensed (if applicable), bonded, and insured
- No foreclosure or short-sales permitted within the last 3 years
- No Chapter 7 bankruptcies within the last two years
FHA 203k Streamlined Eligible and Ineligible Repairs:
- Eligible Repairs Streamlined FHA 203k Mortgage Loan
The Streamlined 203k Limited Repair Program allows for less extensive renovation repairs and home improvements, with a minimum repair escrow account of $5,000, not to exceed $35,000. Eligible repairs using the Streamlined FHA 203k Mortgage Loan:- Repair/replacement of roofs, gutters, and downspouts
- Repair/replacement/upgrade of existing HVAC systems
- Repair/replacement/upgrade of plumbing and electrical systems
- Repair/replacement of flooring
- Minor remodeling, such as kitchens and bathrooms, which does not involve structural repairs
- Painting, interior and exterior
- Weatherization, including storm windows and doors, insulation, weather stripping, etc.
- Purchase and installation of appliances, including free-standing ranges, refrigerators, washers/dryers, dishwashers and microwave ovens
- Accessibility improvements for persons with disabilities
- Lead-based paint stabilization or abatement of lead-based paint hazards
- Repair/replace/add exterior decks, patios, porches
- Basement finishing and remodeling, which does not involve structural repairs
- Basement waterproofing
- Window and door replacements and exterior wall re-siding
- Septic system and/or well repair or replacement
- Ineligible Repairs Streamlined FHA 203k Mortgage Loan:
- Major renovation or remodeling, such as relocation of a load-bearing wall
- New construction, such as a room addition
- Rehab of structural damage, such as caused by termite damage
- Repair or home improvement requiring detailed drawings or architectural exhibits
- Landscaping or similar site improvements
- Rehab or home improvement that require more than two payments per specialized contractor
- Require plans or architectural exhibits
- Require a plan reviewer or approved FHA Consultant to develop a “Specification of Repairs/Work Write-Up”
- Result in work not starting within 30 days after loan closing
- Cause the home buyer to be not be able to occupy the property for more than 15 days during the period in which the rehabilitation is occurring
Standard FHA 203k Eligible Repairs:
- The standard FHA 203k rehabilitation mortgage loan covers repair budgets exceeding $35,000, repair items that are ineligible under the streamline 203k program or require the use of an approved FHA Consultant. Eligible repairs using the standard FHA 203k Mortgage Loan:
- Structural alterations and reconstruction, such as repair or replacement of structural damage, chimney repair, additions to the structure, installation of an additional bath(s), skylights, finished attics and/or basements, repair of termite damage and the treatment against termites or other insect infestation
- Convert a one family dwelling to a multi-family dwelling (i.e. two to four unit) and vise-versa
- Changes for aesthetic appeal and elimination of obsolescence such as new exterior siding, adding a second story to the property, covered porch, stair railings, attached carport
- Connecting to public water and/or sewer system
- Installation of new plumbing fixtures is acceptable, including interior whirlpool bathtubs
- Installation of a well and/or septic system
- Major landscape work and site improvements, such as patios, decks, and terraces that improve the value of the property equal to the dollar amount spent on the improvements or required to preserve the property from erosion
- Rehab of existing walks and driveway is acceptable if it may affect the safety of the property
- Adding a detached garage or another dwelling so long as the new addition is attached to the existing dwelling
- Improved accessibility to a disabled person, such as remodeling kitchens and baths for wheelchair access, lowering kitchen cabinets, installing wider doors, and exterior ramps
- Move an existing house onto another site
Talk to a FHA 203k Renovation Mortgage Expert
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Answer a few questions, and a FHA 203k Renovation Home Loan Mortgage Expert will call you back.
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