FHA 203(k) Full Loan
This is FHA’s renovation/rehab loan program. 203(k) loans allows you to buy a home, fix it up, and include all the costs into one loan. Or if you own a home that you want to remodel or repair, you can refinance what you owe and include the costs of the repairs all into one loan.
When using a 203(k) loan to purchase and renovate a home, there is a minimum down payment of 3.5% of the purchase price plus renovation costs. This can allow you to purchase and rehab a home with a minimal cash investment.
203(k) Renovation Loan Details
Single Family Residential Homes Allowed
- Allows repair/renovation costs to be rolled into the loan
- Major items ARE a lowed (Foundation)
- Close before repair/rehab begins
- Only one closing. Money disbursed on a draw basis after closing as construction is completed.
- Loan amount can go up to 110% of the "after improved value" from the appraisal
- Buyer can include optional renovations/upgrades
The process is simple if you are working with the right loan officer.
- Client is pre-approved based on income, assets, debt and credit
- Client selects property
- Client meets HUD consultant at property for property inspection and Work Write Up
- Client gets contractor bid(s) and compares figures with consultant
- Work Write Up is prepared by HUD consultant
- Appraisal is performed "as completed" upon executed contract
- All paperwork is completed and submitted to underwriting
- Underwriter approves the loan
- Approved loan is sent to title company
- Loan closes and rehab account is created
- Funds are disbursed as work is completed and inspected
- Rehab is complete
Now with the process complete, you can enjoy your new home!
Examples Repairs & Renovations
The loan can be used towards the following property repairs and improvements:
- Repair Foundation
- Replace Roof
- Paint Interior & Exterior
- Install New Flooring
- Remodel Kitchen/Bath
- Upgrade to Central Heat/Air
- Repair Termite or Moisture Damage
- Energy Efficiency Improvements
- Replace or Install Siding
- Handicap Accessibility
- Landscaping/Exterior Repairs
- New Built-in Appliances
- And More!
Items NOT Allowed
Any luxury item and/or improvement that does not become a permanent part of the subject property is not eligible, including:
- Recreational or luxury improvements, such as pools, hot tubs, whirlpool baths
- Barbecue pits, bath houses, tennis courts, satellite dishes or tree surgery
- Additions or alterations to support commercial use or to equip or refurbish
We require a minimum middle FICO score of 620 for this program. Most lenders require a minimum FICO score of 640, which means we can qualify more borrowers. Also, many lenders will only offer the 203(k) Streamline, but not the regular 203(k). The Deibler Group, the Frederick MD division of Goldwater Bank, N.A, offers both.
Want more information on the FHA 203(k) Full program?
Contact us today to receive more information.
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