Category Archive FHA 203 (k)

Steps to getting a FHA 203k Rehab loan in NJ-PA-DE-CT-MD-MA – Purchases

So we have gone through a lot of different scenarios about FHA 203k rehab loans and we have done a bunch of question and answer sessions and we will continue to go down that path with this blog- but I think its time to give you a clear concise list of things to do.  This will be a two part blog series that will include a checklist depending if you are looking to use an FHA 203k rehab loan for either a purchase or a refinance because each type of loan has its own steps.  Some steps are the same but depending on the situation the order could be somewhat different.  Remember the whole idea of this series is to give you the path to getting the FHA 203k renovation loan that you are looking for with the less amount of obstacles, stress and aggravation.

Here are the steps and we will try to get into each step with a little depth.  If it starts to get too long we will break this post up into a few parts.

  • Pre-approval— This is your starting point before even looking at properties.  You need to see if you qualify based upon credit, income and assets. Minor credit problems can be worked through and sometimes we can look at using a non-occupying co-signor if you are close on income to help you qualify.
  • Find a Realtor®– Its is important to find a Realtor® that has experience working with FHA 203K loans just like it is important to find experienced loan officer.  If you are in any of the states that I am licensed in I probably have a few recommendations that I can give you- just ask.
  • You’ve Found a Property– Now what? With a FHA 203k your best move is to do a feasibility report.  A feasibility report is a scaled down version of a FHA 203K consultants work write-up.  The idea here is that you only pay a small fee (usually around $200) to see what it will take to get the property up to minimum FHA property standards.  You do not want to buy a Money Pit.  Plus this will give you a something to use to negotiate your sales price.



  • Pick your Contractor— This one is important- we do not allow for customers to do “self help”, this means we want you to have a licensed and insured contractor working on your project.  Also if the contractor you have selected has not done an FHA203k project before then it is important to have the FHA 203k consultant and /or the lender explain to him or her exactly how the loan works and what they can expect.   This is extremely important to the process- we want everyone to know exactly what there role is.
  • Close your loan and Start the Work! — Now that all the paperwork and the loan has closed its time to get to work and get the house ready for you to move in.

Of course there are more steps along the way but I am trying to give you an overview of what to expect.  The FHA 203K Rehab loan process can take more time and add some additional steps to buying a house but the great part is you get to create “Your New Home”- you pick and design what you want and the program allows you to do it all in one easy to use program.

Feel free to contact me with any questions regarding the FHA 203K program.  I am always available!

Jeff Onofrio — Office 856-505-6717  Mobile 609-217-9409




FHA 203k rehab loans- Question and Answer- Part 3

It’s been a little while since our last installment of the FHA 203K rehab loan question and answer so i figured I would use this time to take a few questions from some recent emails that I have gotten.

Bill in Lansdale, PA wrote in and asked:

Jeff- i have been reading a lot about 203K loans but i was wondering- how do i find a good FHA 203k consultant- do you have someone or should I go to the phone book to find someone?

Bill- great question.  Finding a good FHA 203k consultant is like finding a good loan officer.  You need to get recommendations and you need to do research to find the right person to work with you.  That being said i have worked with a few but the best FHA203K consultant I have worked with is  Mike Grace.  Mike runs a great website called The 203K Connection and you can click here to get there  Mike’s site is a central place for you to start your FHA 203K research- it brings together contractors, consultants and lenders into one place.

When I have a customer in NJ, PA, CT or any other state that I lend in I go to Mike’s site and I put in my order for a consultant because I know that Mike has already screened these FHA 203K consultants and I can feel comfortable that they will do the job the RIGHT WAY!  That’s all that really matters in my eyes.

Don C in Mt. Laurel, NJ asked:

When buying a bank owned property what does underwriting normally ask for as far as a contingency reserve for 203K renovation loans and what happens if we do not use that contingency within the scope of work?  Can I use it to put in a hot tub?

Good question Don!  First- the hot tub questions comes up a lot! I wish you could but that is not allowable by HUD.  You have a few options- you can either take the money and re-apply it back against your principal (bad part is that it does not drop your payment), so typically a customer such as yourself will find somewhere else to apply the funds.  An example might be adding a deck or doing some additional work to another bathroom that was not part of the original spec of work.  Your best bet is to think of that contingency as a lottery ticket and if everything goes according to plan you might be able to get some extra stuff out of the project- but don’t go into the transaction banking on using that contingency reserve.  The truth is it is there as an emergency fund in case of cost overs runs.  Back to what the bank will ask for- its typically up to the consultant unless it is a REO property- the standard is 10% but on REO properties our companies policy is to require 15%.

Paul G from Baltimore, MD wrote in and asked:

Jeff- there doesn’t seem to be a whole lot of companies that provide these types of loans- why is that?  Finding information is tough.

Paul- you hit the nail on the head.  The truth is there are not a lot of lenders who want to deal with these type of loans.  The reason being is that they are time consuming and there is no many moving parts.  Remember with a FHA 203K renovation loan you have a lot more hands involved.  You have contractors, consultants, appraisers, lenders, Realtors (if a purchase),  etc, etc… and the truth is if everyone is not on the same page it can be a mess.  So lenders are hesitant to focus on these type of loans.  Some lenders offer them but they don’t specialize- be careful of this because this is typically where i get a lot of my customers.  This is a whole post I could write just on this topic- but for now just do your due diligence and make sure to “interview” your potential lender.  Hope this helps!

Well thanks again guys for writing in with your questions and I promise to get back to your questions quicker! Remember- FHA 203K loans aren’t for every customer or every situation but feel free to contact me to see if they fit your situation.

Jeff Onofrio

Jeff Onofrio is a licensed mortgage banker in over 15 states who works for AnnieMac Home Mortgage- please send your questions to or feel free to call him at 856-505-6717.

FHA 203k Renovation Loans and Lenders NJ-PA-DE-CT

One of the hardest parts of getting a FHA 203K loan is locating a lender who is knowledgeable and who understands what it takes to get your loan done.  What I have found from doing these loans is that there are plenty of customers out there who want these loans and plenty of customers who are trying to do there research but the true FHA 203k lenders in my area: NJ, PA, DE, CT and MD are few and far between.  So many lenders tout there knowledge and there understanding of what it takes to get a loan done but the truth is many of these lenders are inexperienced in actually closing these loans.

I understand that lenders are now looking for new niches to be able to keep themselves a float in this mortgage environment but the issue lies in the fact the lenders have not been properly trained to “Set the Expectations” with there borrowers.  As you know, or are finding out from reading my blogs, FHA 203k lending is not as simple as a regular loan.  The truth is in this mortgage environment no loan is simple.  What I do for my customers with “Setting the Expectations”, is to give them a clear understanding of what is expected from the:

  • Lender
  • FHA203K Consultant
  • Appraiser
  • Contractors

Each one of these interested parties plays an integral role in the loan process.  I will explain each persons role moving forward in a few more posts in the coming days.  In the meantime- feel free to contact me and I will be happy to walk you through the process and help you with any questions or concerns.

Jeff Onofrio
AnnieMac Home Mortgage

FHA 203K Home Renovation Lending

Office 856-505-6717

FHA 203k rehab loans- Question and Answer- Part 2

Hi guys- thanks for reading our last post about FHA 203k rehab loans.  We have received a few more questions and as promised I am going to answer them here for everyone to read.  I am hoping to have a few contractors and a good 203K consultant I know to do a Question and Answer here for you in the next few days.  Enjoy the information and feel free to contact me with any questions regarding the FHA fixer upper loans!

Man and contractor

Question #1- What are the steps when buying a house with a FHA 203k rehab loan?

I took this answer directly from the HUD website– the process is simple follow these steps and be sure to ask me for help!

The 203(k) loan includes the following steps:

 - A potential home buyer locates a fixer-upper and executes a sales contract after doing a feasibility analysis of the property with their real estate professional. The contract should state that the buyer is seeking a 203(k) loan and that the contract is contingent on loan approval based on additional required repairs by the FHA or the lender.
 - The home buyer then selects an FHA-approved 203(k) lender and arranges for a detailed proposal showing the scope of work to be done, including a detailed cost estimate on each repair or improvement of the project.
 - The appraisal is performed to determine the value of the property after renovation.
 - If the borrower passes the lender’s credit-worthiness test, the loan closes for an amount that will cover the purchase or refinance cost of the property, the remodeling costs and the allowable closing costs. The amount of the loan will also include a contingency reserve of 10% to 20% of the total remodeling costs and is used to cover any extra work not included in the original proposal.
 - At closing, the seller of the property is paid off and the remaining funds are put in an escrow account to pay for the repairs and improvements during the rehabilitation period.
 - The mortgage payments and remodeling begin after the loan closes. The borrower can decide to have up to six mortgage payments (PITI) put into the cost of rehabilitation if the property is not going to be occupied during construction, but it cannot exceed the length of time it is estimated to complete the rehab.
 - Escrowed funds are released to the contractor during construction through a series of draw requests for completed work. To ensure completion of the job, 10% of each draw is held back; this money is paid after the lender determines their will be no liens on the property.

Paint Brush

Question #2- Why are banks looking for buyers who are using FHA 203k and conventional loans only when selling bank owned properties?

When banks are trying to selling there properties they realize that in order to sell them they need loans that allow for repair escrows or can be financed “as-is”.  Regular FHA loans are great for purchases but most lenders need the repairs to be done upfront.  FHA 203k is your way around this.  I get calls from borrowers all the time who are told that they must get financing using the FHA 203k only- they are confused but once we go over the details they usually are excited to find out what the loan can allow them to do- replace carpets, remodel kitchens and baths, replace major appliances, etc, etc…

Bank owned properties


Jeff Onofrio – AnnieMac Home Mortgage – 856-505-6717 –

FHA 203 (k) Rehab Loans- Important Things To Know

There are some important features to remember when looking into a FHA 203K Rehab loan.  These are great loans for buyers looking to purchase a foreclosure or short sale or for the home owner who wants to update or remodel there house.  Below are a few important things to remember:

  • FHA loans are for primary residences only–  you cannot be an investor and try to get a FHA loan or a FHA 203K rehab loan.  This is really important- I cannot tell you how many calls we get from investors looking to utilize this program and or skirt the system.  FHA loans are for primary residences only!
  • 2 types of FHA 203K loans–  you can go with a Full K or the FHA 203K Streamline.  I will explain these two loans in more detail in my next post.  But for now just remember that you can only get up to $35,000 with the FHA 203K streamline and the repairs must be cosmetic in nature, nothing structural.
  • Single close loan- unlike traditional construction lending you only have one closing with the FHA 203K loan.  No need for construction loans and then permanent financing with the FHA 203K rehab loan you get all of this in 1 single close solution
  • Up to 4 unit properties– you can use the 203K loan to finance properties from 1 to 4 units for both purchases and refinances.
  • Down payment as low as 3.5%- down payments are the same for a regular FHA program as they are or the 203K.

FHA 203K rehab loans are a great alternative to second mortgages, home equity lines and construction financing.  Finding an FHA lender who specializes in 203K’s is very important.  You do not want to be dealing with someone who just started learning this program- you need a seasoned lender who underwrites these loans in house.

Feel free to call me with any questions or if you would like to see if an FHA 203K rehab loan is right for you and your family.  You can reach me anytime at 609-217-9409 or via email at

Jeff Onofrio – AnnieMac Home Mortgage – 856-505-6717 –

NJ-PA-DE-MD-VA Rehab loans – NJ FHA 203K

While most FHA lenders look down on repair escrows and wanting to hold back money on loans the easy way around this is the FHA 203K rehab loan.  I am located in Mt. Laurel, NJ and recently my Realtors have been asking specifically for FHA 203K rehab loans because the banks are now requiring this as a condition to accepting an offer on bank owned properties, why?

This is simple- most foreclosures have work that needs to be done in order to satisfy HUD/FHA minimum property requirements.  You cannot get around this with a typical FHA loan and the options are limited.  FHA 203K loans allow you to do both minor and major repairs on the property.  And get this- they allow you to go up to 110% of the appraised value of the property after rehabilitation.

Who thought that 100% + financing was dead!  Its not and FHA will allow you to do this with only 3.5% down on purchase.

If you are considering buying a foreclosure property or thinking you might like to rehab your current one contact me and I will be happy to run through with you your options using an FHA 203K loan.

Jeff Onofrio – AnnieMac Home Mortgage – 856-505-6717 – /

FHA 203K Rehab Loan- Scenario- Adding Square Footage

FHA 203K loans are great for borrowers who are looking to refinance and also for purchases.  I wanted to use this blog, and the next few posts,  to show you examples of how you can use the fixer upper loan for certain situations.

A customer of mine who has owned her home for the last 4 years decided to contact me about adding on some square footage.  See in her community there are many homes that have 2 levels and the average square footage was around 2,000 square feet.  When she came to me her home had 1,050 sq ft and only one bathroom.  She asked me for a solution and I explained to her how a FHA 203K rehab loan worked and how it could benefit her and her daughter.  Using this type of loan we were able to have a contractor put a bid in for $38,000 to double the square footage of her home and add on an additional bathroom.  She only had a rancher and now her home has a second floor and its has increased the value by almost $75,000.

Yep, its amazing- by doubling the size of her home, adding on a bathroom, giving her a great interest rate (5.5%) and doing it all with a one close mortgage my borrower was able to transform her property and her way of life.  Its all because of the FHA 203K Rehab loan.  Email or call me to discuss how this FHA loan can help you to do the same.

Adding Square Footage


Jeff Onofrio – Licensed Mortgage Originator- NMLS # 38670 – Office: 856-505-6717