Looking for that perfect home for your family or need to make major repairs to your current home but don’t quite have the credit or down payment needed for a conventional renovation loan then the FHA 203k full renovation loan may be your answer.
Benefits and Features of the FHA 203k full renovation loan
- For Primary Residences (1-4 unit family properties) only
- 3.5% minimum down payment
- Perfect for properties that may have been given low marks on quality and condition ratings and unable to obtain financing with Conventional, VA, USDA or normal FHA loans.
- The contractor costs can be built into the loan.
- No need for a second mortgage to repair the property. All costs are built into the first mortgage, which means lower closing costs.
- Loan amount can go up to 110% of the After Repaired Value (ARV) from the appraisal
|203k Full Allowed Improvements|
|... and many more, If it is permanently affixed and adds value it may be allowed. Contact us about your project.|
|Room Additions||Adding an Attached Garage|
|Converting a one-family structure to a two-, three, or four family structure||repairing, reconstructing or elevating an existing foundation where the Structure will not be demolished|
|repairing or adding roofing, gutters, and downspouts;||Foundation Repair|
|Addition of Luxury itmes such as Pools or Spas||repairing/replacing plumbing, heating, AC and electrical systems|
|making site improvements that add value||Lead Paint & Asbestos removal|
|Installing or Repairing of Wells and/or Septic||Connecting to public water and sewage systems|
|Termite removal and repair||Mold Removal|
Contractor Details/Requirements for an FHA 203k full renovation loan
- Must have a construction contract with a contractor, no self-builds
- Use of a HUD Approved 203k Consultant is required
- The Bank reviews and approves your contractor to determine they are adequately qualified to perform the work and complete the job
- Plans & Specs must have been prepared by a registered, licensed, or certified general contractor, renovation consultant, or architect
- Plans & Specs must fully describe all work to be done & state when stages of completion will be scheduled, including both the job start & completion dates
Insurance Requirements with an FHA 203k full renovation loan
- You will be required to obtain Hazard and Flood (where applicable) at the ARV amount at time of loan closing
Changes or Change Orders when using an FHA 203k full renovation loan
- Any changes to original Plans and Specs must be accompanied by a necessary Change Order paperwork and not exceed original loan amount and be approved by HUD before any work is done.
Limitations on the FHA 203k full renovation loan:
- Minimum of $5,000 in repairs are required
- Ineligible Properties (not all inclusive please call with the specifics of your property)
- Property Flipping NOT Allowed
- manufactured housing
- New construction/never occupied
- Homes Purchased with Government assistance of any kind such as HUD $100 down, down payment assistance or income such as section 8.
- Homes constructed less than 12 months from Certificate of Occupancy (CO)
- Homes being relocated from one property to another
- Investment/secondary homes are not allowed. The Property must be owner occupied. For These, you would use the HomeStyle Renovation Loan
- Items NOT Allowed on an FHA (not all inclusive please call with the specifics of your project)
- Recreational or luxury improvements, such as pools, hot tubs, whirlpool baths. For these improvements, you would use the HomeStyle Renovation Loan
- Barbecue pits, bath houses, tennis courts, satellite dishes or tree surgery
- Additions or alterations to support commercial use or to equip or refurbish
- Washers and dryers
- If a refinance, you are not eligible to receive any cash back at closing
- Renovation Costs may include (not all inclusive please call with the specifics of your project):
- Labor and materials
- Soft costs (architect fees, permits, licenses, inspection fees, independent consultant fees, engineering fees, fees charged for processing draws, fees for energy reports (HERS), review of renovation plans)
- Contingency reserve of 10% of the cost of labor, materials and soft costs) – this is optional unless property is a 2-4 unit property
- Contractor bid must be given to appraiser to determine ARV
- If using this loan for Energy Related Improvements, a HERS Energy report must be provided to us and appraiser
- If funds remain after all work is performed, they will be applied to the loan
Availability of the FHA 203k full renovation loan in America
Home improvement, renovation, and rehab Mortgage Loan State AvailabilityUS State availability for Home improvement, renovation, and rehab Mortgage Loans
So if you’ve been looking for that perfect home or need to fix up your home FHA 203k Full Renovation loan may be the perfect way you can buy or fix up your dream home that you would otherwise not be able to purchase or repair. There is also an FHA 203k streamline rehabilitation mortgage for less than major repairs.
Contact us anytime and we would be delighted to consult with you and your project.