What is a 203K Loan?

FHA's 203K loan program is designed to finance the purchase and renovation of a home,all in one loan.  FHA's Streamlined 203(k) program permits homebuyers to finance up to an additional $35,000 into their mortgage to improve or upgrade their home before move-in. With this new product, homebuyers can quickly and easily tap into cash to pay for property repairs or improvements, such as those identified by a home inspector or FHA appraiser.

To be eligible, the property must be a one- to four-family dwelling that has been completed for at least one year. The number of units on the site must be acceptable according to the provisions of local zoning requirements. All newly constructed units must be attached to the existing dwelling. Cooperative units are not eligible.  An existing house (or modular unit) on another site can be moved onto the mortgaged property; however, release of loan proceeds for the existing structure on the non-mortgaged property is not allowed until the new foundation has been properly inspected and the dwelling has been properly placed and secured to the new foundation. The Department also permits Section 203(k) mortgages to be used for individual units in condominium projects that have been approved by FHA.

 

What improvements are eligible under 203K 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, which does not involve structural repairs

·         Painting, both exterior and interior

·         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

 

Who is  a 203K Consultant?

The 203(k) consultant is an individual that has been designated by a HUD field Office for the purpose of completing the Work Write-Up/Cost Estimate and the required architectural exhibits for the borrower.

Duties of 203K Consultant:

I. Site Visit:

II. Consultant prepares a detailed Report which contains:

III. Consultant delivers the Report Package:

IV. Selection of a Contractor by the Borrower:

V. Loan Closes:

VI. Consultant Performs Draw Request Inspections: