Mortgage Programs

KEY PRODUCT FEATURES OF THE FHA 203(K) Loan

Many are surprised to find out that you can use a FHA 203k loan to refinance or purchase a property and roll in the cost of rehabilitation and renovation.  This is one of the great ideas behind the FHA 203k loan.  Frequently, I receive calls from customers stating they don’t have enough equity in their home to get a line of credit or enough cash on hand to do the improvements that they would like to in their new home purchase.  In a search for a company to meet their needs, they stumble onto my web-site.  This is when they realize that they do have options, and the program that will fit their needs is the FHA 203k loan.

  • The FHA 203(K) is a loan that allows the buyer to purchase a home without a CO at closing.
  • Can be used with short sales, REO and foreclosures.
  • It can also be used to refinance your current mortgage to upgrade your home.
  • 30 Year fixed rate loan.
  • Creates equity fast.
  • Convert commercial 5-6 units to HUD limits of 1-4 family.
  • Convert single family homes to 4 family homes.
  • Mixed use properties with no more than 25% commercial space is eligible.
  • Buyer can borrow up to 110% of the appraised completed value.
  • Project must start within 30 days of closing and be completed within 6 months of closing.

 

There are solutions to your home improvement problems.  The answer is the FHA 203k Refinance.

What repairs are eligible to be completed with a FHA 203K Loan?

If you are either looking to purchase a home or possible rehab your existing home, it is important to know the repairs you can do with an FHA 203k loan. It is not breaking news to hear that the market is flooded with homes that need work. The difficulty that potential home buyers are having is looking past the existing state of the property. Knowing the eligible repairs before you go out to see the homes will help you visualize the home in its future state. Also there are a lot of existing home owners who lost equity in their home over the past few years and by knowing the repairs that be be financed in with an FHA 203K loan will help them re-gain their lost equity.

FHA 203K Streamline Eligible repairs ( $35,000 in total repair cost )

  • 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 renovation, such as kitchens & baths, which do not involve structural repairs
  • Painting, both exterior and interior
  • Weatherization, including storms windows and doors, insulation, weather stripping, etc…
  • Purchase and installation of appliances, including free-standing ranges, refrigerators and microwave ovens
  • Septic system and/or well repair or replacement
  • 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 renovation that does not involve structural repairs
  • Basement waterproofing
  • Window and door replacements and exterior wall re-siding

Here are some examples of Ineligible Improvements with FHA 203K

  • Renovation involving structural changes, like moving a loan-bearing wall, or new construction, like adding rooms
  • Landscaping or fencing
  • Work that will not start within 30 days of loan closing or will cause the borrower to be displaced from the home for more than 30 days or renovations that will take more than 6 months to complete
  • Luxury items like swimming pools, hot tubs, tennis courts, etc.

The second type of FHA 203K is referred to as the FHA 203K Standard. ( $35,000 and above ) Below is a list if of improvements that borrowers are able to complete:

  • All of the improvements listed in the eligible improvements for a streamlines 203(k)
  • Structural alterations and reconstruction, like room additions, repair of termite damage, major remodeling of kitchens and bathrooms, finishing an attic or basement, adding a second story to a home, etc
  • Major landscaping and site improvement including correction of grading and drainage problems, tree removal and repair of sidewalks and driveway, if they are safety hazard to the property

 

 

How Much Money Do You Need to Buy a Home?

One of the biggest concerns of first time home buyers when they’re looking at getting their first mortgage is just how much money they’re going to require. Qualifying for a mortgage is the first step in the process, but it is important to understand if you will need cash for your purchase and if so, how much.

Understanding what you’ll be responHome Purchase Down Paymentsible for paying for in cash is good information to have before you even submit a mortgage application. The specific costs can vary depending upon the state that you live in, the cost of your home and to other factors, but here are some basic things to consider that should be considered.

Down Payment Required for a Mortgage

In order to qualify for a mortgage, you will likely have to produce a down payment unless you are using a VA (Veterans Administration) or USDA Rural Housing Loan . The specific amount required for a down payment depends upon state guidelines as well as the type of loan. FHA mortgage loans offer the competitive down payment options for those who qualify, requiring 3.5% of the purchase price down.

Mortgage Closing Costs

In addition to requiring money for your mortgage down payment, you’ll need to save money for closing costs. This is something that you may be able to get paid by the seller of your new home, but as this is not something that is guaranteed, it is wise to have some money on hand to pay for all of the costs of purchasing a home that cannot be rolled into your mortgage. If you present a mortgage lender an offer that does not include closing costs covered by the seller, often as a first time home buyer, you are required to prove that you have the money to cover them. Depending on your local market environment and location, 1.5% to 3% of the purchase price may be a fair estimate for your closing costs, and somewhere in this range is what a mortgage lender will typically need to confirm.

Target Purchase Price and Other Considerations

Since the location, cost and your unique financial and credit attributes can affect what you will need to put down when you purchase a home, we can help you better understand the estimated amount that you’ll need to pay when buying a home. More importantly,  we can help you understand and target the home purchase price that suits your specific needs an finances so you can be prepared in advance to make your first home purchase!