203K FHA LOAN . .
Buy it & Fix it . . . ALL IN ONE
FHA 203(k) STANDARD
In 1978, the Federal Housing Administration (FHA) introduced the FHA 203k Mortgage Insurance Program which enables borrowers to purchase or refinance their home - including the costs to renovate it within the same loan. This program allows borrowers to make a wide range of improvements, including structural changes & additions to the building “footprint”. Features include:
Opportunity to borrow against the value of the home after improvements – up to 110% of future value!! Flexible Credit Qualifying Available for owner-occupied, 1-4 unit properties, Planned Unit Development (PUDs), Condos, and Real Estate Owned (REO) Properties
Loan size is determined by the limit set by the FHA for your area
Repair budget is calculated based on the appraisal, your credit limit and the purchase price of the property
Examples of Reason's to do a 203(k) Loan:
As simple and minor as needing appliances or upgrading the appliances.
Luxury items like a jetted tub may not be allowed.
Adding hardwood floors, new counter tops or a kitchen missing entirely.
Broken pipes, chipping paint, mold or lead paint issues can all be included in a 203K loan.
An addition, full scale remodel, or adding a garage
Useful U.S. Department of Housing & Urban Development web sites:
**FHA TO REDUCE ANNUAL INSURANCE PREMIUMS**
FAQ Page Link FHA Mortgagee Letter 2015-01
FHA Lending Limits - Virginia
Freddie Mac REO - What You Need to Know
Freddie Mac REO Home Listing Site
HUD.gov 203(k) Rehabilitation Mortgage Insurance
HUD.gov Buying HUD Homes
HUD Single Family Home Locator (interactive map)
HUD.gov Lender List
HUD in Virginia
Search for available HUD Homes for Sale
** FHAhas updated their LENDER LIST search capability. Followthis LINK to search for HUD-approvedSingle Family &/or Multifamily lenders, using a variety of criteria,including:
- Lender Name
- City & State
- Mortgage Originator &/or Mortgage Servicer
- Home Equity Conversation Mortgage Program Lenders
- 203(k) Rehabilitation Mortgage Insurance Program Lenders.
REAL ESTATE BROKER / AGENT
If your not familiar with the FHA 203K loan process it can be quite a cumbersome, and tricky one!
Have you been told a property needs a cash buyer?
This product is the solution to being able to obtain it without a cash purchase!
This product is the one tool available in the market place with FHA rates that can be used to finance a property in need of repair.
A large percentage of the business profession prefer to steer clear of this product due to its’ complex layers, and added timeline needed to close. However, for the savvy and experienced Real Estate broker this product can be your best friend in a sea of properties requiring cash which would not be able to be financed without such a product.
In a nut shell, it is a FHA product typically about 1/4 point higher than standard FHA rates. The minimum percentage down required stays at 3.5%. The average closing timeline is 45 to 60 days. Most individuals use this product as a short term strategy to obtain the property. Then 120 days after the repairs are completed a Streamline FHA Refinance is used to refinance the property into a lower rate.
MORTGAGE BROKERS / LOAN OFFICER
Member of National Association of FHA Consultant