FHA 203k

FHA 203(k) – Home Construction and Rehab Loan

The FHA 203(k) is The Department of Housing and Urban Development’s (HUD) version of a construction loan specifically designed for rehabilitation (rehab) or remodeling of existing owner occupied homes, including single family and two to four units and condominiums.

This program had lost its appeal in the recent years due to completion with most all major lenders who were offering aggressive construction loan programs or HELOC’s. However the recent credit crunch combined with the increase in loan limits and the low FHA down payment requirements has made this program very appealing.

FHA provides rehabilitation mortgage loans (203k loans) for owner-occupants of real estate to finance the rehabilitation of  existing property, finance rehabilitation and refinancing of the outstanding indebtedness (mortgages) of a property; and finance the initial purchase and rehabilitation of a property.

The FHA 203(k) can be used with 1-4 family dwellings, condominiums and HUD Homes. There is a minimum requirement of $5,000 in repairs. Unfortunately, Co-ops are not eligible.

FHA 203(k) can be used to bring illegal dwellings into code compliance. Mixed use residential / commercial properties may also be eligible. A burnt out shell, incomplete shell or empty foundation is eligible for 203(k) financing provided it is over 1 year old.

FHA will lend up to 98.15% of the future value of the dwelling after all completed repairs but you cannot exceed the maximum FHA loan limit for the area in which the property is located in.

For more information regarding FHA 203k loans, please contact us today.