FHA 203k Renovation Loan

The FHA 203k renovation loan is a fantastic renovation program for owner occupied properties. It offers the following features:

• 3% down payment (we can use downayment assistance to reduce that to 0 down)
• Flexible credit qualifying
• Loans are assumable
• Borrower can finance up to 6 months of mortgage payments to cover the renovation period
• Purchase or Refinance and home improvement all in one loan

The 203(k) loan allows borrowers to rehabilitate or renovate a property which is in need of repair or improvements. This can be the borrowers current residence, or a fixer-upper. A single loan covers the purchase or refinance as well as the cost of renovating the property. At the end of the renovation period, you must occupy the property as your primary residence.

This loan is made available to only a select few lenders by the U. S. Department of Housing and Urban Development (HUD). Eligible borrowers/properties:

• Owner Occupied Purchase and Refinance
• NO Investors
• Single Family Homes, Condo, Townhomes, and 1-4 Unit buildings
• Mixed use is also eligible

The types of improvements that borrowers may make using Section 203(k) financing include:

• structural alterations and reconstruction.
• modernization and improvements to the home's function.
• elimination of health and safety hazards.
• changes that improve appearance and eliminate obsolescence.
• reconditioning or replacing plumbing; installing a well and/or septic system.
• adding or replacing roofing, gutters, and downspouts.
• adding or replacing floors and/or floor treatments.
• major landscape work and site improvements.
• enhancing accessibility for a disabled person.
• making energy conservation improvements.

HUD requires that properties financed under this program meet certain basic energy efficiency and structural standards. However, luxury items and improvements that do not become a permanent part of the property are not eligible uses of a 203(k) loan.