203K Loan

 

 

 

203K Loan - Rehab Program Overview
The FHA 203k loan program is the Department of Housing and Urban Development’s primary program for the rehabilitation and repair of one to four family and mixed-use properties. The loan is a basically a first mortgage home improvement loan.

Lenders have successfully used the FHA 203k loan program in partnership with state and local housing agencies and nonprofit organizations to rehabilitate properties. These lenders, along with state and local government agencies, have found ways to combine the FHA 203k loan with other financial resources, such as HUD's HOME, HOPE, and Community Development Block Grant Programs, to assist borrowers. Several state housing finance agencies have designed programs, specifically for use with FHA 203k loan and some lenders have also used the expertise of local housing agencies and nonprofit organizations to help manage the rehabilitation processing.

HUD also believes that the FHA 203k loan program is an excellent means for lenders to demonstrate their commitment to lending in lower income communities and to help meet their responsibilities under the Community Reinvestment Act (CRA). HUD is committed to increasing homeownership opportunities for families in these communities and Section 203(k) is an excellent product for use with CRA-type lending programs.

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FHA 203K Loan – The Basics:

The FHA 203K program can be used to accomplish rehabilitation and/or improvement of an existing one-to-four unit or mixed-use dwelling in one of three ways:

• To purchase a dwelling and the land on which the dwelling is located and rehabilitate it.
• To purchase a dwelling on another site, move it onto a new foundation on the mortgaged property and rehabilitate it.
• To refinance existing indebtedness and rehabilitate a dwelling;

The most important part of the loan is that it is based upon “after-completed value”.  This means that the repairs are to be performed on the property after closing and that the existing condition of the property will not affect financing since the financed repairs will make the property whole.  When refinancing an existing property, homeowners are usually faced with the issue that, until the repairs, construction or addition are performed the do not have enough equity.  Because the FHA 203K loan uses the estimated after completed value the loan is great for homeowners looking to add on.

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203K Streamline Loan - Rehab Program Overview
The 203(k) streamline loan program offers borrowers the resources to rehabilitate a home that may be in need of repair, either the home that they currently live in, or that special fixer-upper opportunity, without the extra cost or details as found in the regular 203k.  One single loan is used to pay for the purchase (or refinance) and the cost of renovating the home.

Made available to certain lenders by the U.S. Department of Housing and Urban Development (HUD), the FHA 203(k) streamline program has already provided many buyers with the funds necessary to buy their first home, or greatly improve a current home. The FHA 203(k) streamline loan is available to borrowers of all income levels, to homeowners who plan to occupy the house, and for homes with one to four units.

The Streamline loan has a maximum repair escrow amount of $35,000 and does not allow structural repairs to be performed on the property.

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  • 203K and Streamline Eligible Borrowers:
    • Owner Occupants - Purchase - Refinance
    • Non- Profits
    • Investors NOT allowed
  • Types of 203K and Streamline Loans:
    • 30 or 15 year fixed rates
  • Eligible Properties:
    • Single family dwellings
    • Condominium
    • Townhouse
    • Mixed Use (Storefront)
    • 1-4 Unit buildings

 

If you would like to apply or see if you qualify for a renovation loan you can contact us or apply on-line (link).

 

 

 

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CT Loan Originator License #70333.

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