The 203k loan is fantastic program in my opinon.
FHA 203(k) Renovation Loan:
An important tool for community and neighborhood revitalization, the FHA 203(k) loan offers flexible qualifying and low down payments:
FHA down payment (3%)
Flexible credit qualifying
Finance up to 6 months of mortgage payments
Purchase or Refinance and Improve all in one loan
The 203(k) loan program offers borrowers the resources to rehabilitate a home that may be in need of repair, either the home that they currently live in, or a fixer-upper. One single loan is used to pay for the purchase (or refinance) and the cost of renovating the home.
. The FHA 203(k) loan is available to borrowers of all income levels, to homeowners who plan to OCCUPY the house, and the home is 1 to 4 units.
203K Eligible Borrowers:
Owner Occupants - Purchase - Refinance
Single family dwellings
Mixed Use (Storefront)
1-4 Unit buildings- This loan can be used to increase or decrease the number of units.( For example if you have a 2 family building that you want to convert to a large one family, the costs involved can be part of the loan. )
Structural Alteration and Reconstruction:
Elimination of health/safety hazards
Changes for cosmetic appeal
Plumbing, heating air conditioning, and electrical upgrades
Well and/or septic repairs
Roofing, gutters and downspouts
Flooring, tiling and carpeting
Energy conservation improvements
Access for the disabled
Appraisal: The loan to value (also known as LTV ) is based on estimated value after agreed upon repairs are completed.)
The appraiser will be given a copy of your â€œwork-write upâ€ to estimate an after improved value for your new home or current home. The loan given is against that improved value giving you credit for the work to be performed.Other Eligible Costs:
(THESE COSTS MAY BE FINANCED INTO THE MORTGAGE LOAN)
Contingency reserve (10%-20%) ( What is a contingency reserve-Most mortgages for purchase-renovation require an additional 10 percent of the total cost of the project to be put aside into a reserve account. This contingency reserve is only used when unforeseen repairs or costs are found during renovation.)
Up to 6 months PITI (Principal ,Interest ,Taxes and Insurance)mortgage payments
Inspection and title update fees
Architectural & Engineering fees (if needed)
What Steps Do you need to take to Buy a House Using FHA 203(k) Renovation Loan.
As with any Prospective Purchase Your First Step should be to speak to a Mortgage Professional
Locate the home you want and submit a contract for purchase - contingent on a home inspection.
After your contract is signed, schedule a home inspection with a 203(k) cost consultant to budget your renovation.
If you approve the budget, the 203(k) cost consultant will prepare the work write up for the appraiser and lender, and will prepare three contractor bid packages for you.
You can now bid your job to general contractors, or multiple sub-contractors.
Appraiser uses work write-up to value home as if all work is completed.
Loan closing (30 to 45 days average).
Within 30 days of closing start project with general contractor, or multiple sub-contractors.
Please feel to contact me if you have any question or are looking to Purchase a Rehab. Home.