Real Estate in Northeast Florida and Around the World

Today's real estate inventory includes many homes that need a little love - some moreso than others.  Home buyers often are faced with having the money for down payment and closing costs, but not much left over for new carpet, a roof, plumbing or hvac repairs.  So they keep looking for something that doesn't need additional work that is more in line with the cash on hand that they have.

But there is an "app for that" problem....it's called an FHA 203k Rehabilitation loan, and there's even a streamline version of this program, which allows for up to $35,000 above the purchase price for qualified rehabilitation work.  Here are a few Q & A's that help describe the program and what to expect.

What improvements are eligible under the new Streamlined 203(k) program?

The Streamlined (k) program is intended to facilitate uncomplicated rehabilitation and/or improvements to a home for which plans, consultants, engineers and/or architects are not required. The Streamlined (k) program includes the discretionary improvements and/or repairs shown below:

• 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 remodeling, such as kitchens, which does not involve structural repairs
• Painting, both exterior and interior
• Weatherization, including storm windows and doors, insulation, weather stripping, etc.
• Purchase and installation of appliances, including free-standing ranges, refrigerators, washers/dryers, dishwashers and microwave ovens
• 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 remodeling, which does not involve structural repairs
• Basement waterproofing
• Window and door replacements and exterior wall re-siding
• Septic system and/or well repair or replacement

Is there a Maximum Amount that I Can Borrow?

Your FHA 203k approved lender will have a worksheet to help determine the exact amount that can be borrowed, but generally the maximum mortgage amount will be based on 110% of the "after-improved" appraised value.  During loan processing, the appraiser will be asked to review the itemized list of work to be done and materials to be used, and base the appraised value on the "post-construction" state.  So, if the purchase price is $80,000, but the post-contruction value is $100,000, the maximum mortgage amount would be based on $110,000.  This is an example to be used only for illustration purposes, and your situation may bear different results, so always work with an approved FHA 203k lender for specific details. 

Is There a Down Payment Requirement?

The FHA 203k program requires a minimum investment by the buyer of 3.5% of the value.  In the case of the 203k loan, it would be based on the post-rehab or construction value.  The 203k approved lender will be able to calculate the exact amount for you.

Where Can I Find an FHA 203k Rehabilitation Loan Approved Lender?

Call or write me, or post a question/comment to this blog, and I'll be happy to send you a list of approved lenders in your area - whether it is Northeast Florida or Northcentral West Virginia, Southern Maine or Northern Texas - I am happy to help you get into your new home!