Real Estate Magazine

FHA 203K Rehab Loans

Posted on the 30 June 2011 by Homesmsp @HomesMSP

Many of the homes listed for sale are foreclosures and need some work.  If you are looking at a home that needs repairs or if you want to remodel your home, a FHA 203K loan may work for you.  It is a mortgage that allows you to buy a home (or refinance) and make repairs as part of the mortgage.

There is a streamline version of this loan that allows for repairs up to about $35,000 including some of the loan costs.  You can not do any structural changes to the home, but you could replace the roof or windows, update the furnace and plumbing, replace siding, carpet and paint. 

The full 203K allows for large and small dollar projects including room additions and garages.  If it affects the frame or structure of the home, it must be a full 203K.  The full 203K requires the use of a HUD consultant so there is an additional fee of up to $1000.

If you are thinking about doing a rehab loan, you will need bids from licensed contractors.  Once the bids are in, we can determine whether it is a streamline or full 203K and what your loan amount will be.  The appraisal is based on the final improved value.  The work must be done by licensed contractors, so you can not do the work yourself unless you are a licensed contractor.  The work must begin within 30 days of closing and must be completed within 6 months of closing.  You need to allow for extra time between writing your purchase agreement and closing to allow for the contractor's bids.


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COMMENTS ( 1 )

By Kevin the 203k loan guy
posted on 08 July at 00:32
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Both 203k loans can solve many issues that lenders have with properties, like health and safety issues. That can be broken windows, a broken heater, a roof in need of repair, but you can also get new carpet, paint and even appliances which really helps out the cash strapped home buyer. Now we just have to get the Realtor community to warm up to this unique product! 203k loan

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