Senior VP if Mortgage Lending
I had to tear out my sewer line a year and a half ago due to aging clay piping and couplings, it was a pricey project. Digging a 6-7 foot deep hole in the ground forty feet long is anything but cosmetic...
Since you'll need a Full 203k loan, you'll want to have your general contractor (or multiple contractors, one of which must be a GC but a single GC would keep things more orginized for the lender and yourself) get out to the property and bid out the remainder of the work to be done and have your HUD consultant meet with you both at the same time to get the ball rolling on that aspect. Since the sewer line is pretty essential to a home's ability to function, my guess is you'll find a way to pay for it before you can wait the ~45 days to close and start work so the remainder may only be cosmetic work inside the home but if you're not in a position, you'll definitely need to proceed with the above.
If you need a referral for a HUD consultant, shoot me an email, I'll be happy to help with that.
If you have superior credit or more than 5% equity (10%+ ideally), the conventional version would probably be the best route to go, contrary to a post below, the conventional version (Fannie Mae and Freddie Mac are both investors for a conventional rehab loan) CAN be used for both structual and non-structual repairs and more than 30k as well, just like a full 203k.
Another correction, the 203K will allow up to 110% of the after improved value to DETERMINE your max loan amount on a refinance or purchase but you will _NOT_ be getting a loan for 110LTV (LTV = Loan-To-Value AKA 110% of the value of your home). All FHA loans have a base loan amount and the up front mortgage insurance premium (UFMIP) is financed on top of that (unless you want to pay to reduce your loan amount). For your example the max LTV will be 110% of say a 100k future value which is 110k minus your required investment of equity (or cash if you don't have sufficient equity to cover all of the work+financed costs). FHA requires as of when I write this a 2.25% equity position on a refinance (3.5% on a purchase) so your max LTV would be 110% x 97.75% = 107,525 + the financed PMI for the FHA loan.
I'll stop here for now, feel free to ask more questions here or email me directly if you need accurate answers to your questions immediately.
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