Several of my clients have been looking at homes that need work – an FHA 203K mortgage can be just what they need! It allows you to buy a home and finance the repairs that need to be done.
There are two types of FHA 203K loans – one is a 203K streamline and that allows up to $35,000 in additional repairs, the other is a full 203K and you are limited to FHA mortgage limits.
If you have non-structural repairs that will total about $30,000, the 203K streamline is the way to go! It will allow you do fix things like carpeting, windows (as long as the window size doesn't change), furnace, water heaters, etc. You can update the kitchen and bathroom, you can replace the siding or roof. You are limited to a total cost of $35,000 and that has to include the 203K costs along with the contingency reserve. Basically you need to avoid anything that will change the foundation or the frame of the house.
If you want to remodel and it will change the structure, you will need to do a full 203K. That requires a HUD consultant. With a full 2o3K, you can do all types of changes from a complete remodel to a teardown as long as you use the same foundation! You can add on a new room or an attached garage.
Once you have found a house that you want to buy (or maybe your current home needs some remodeling), you will need to get bids for the changes you need. After you close on your new home, the repairs will start. They need to be completed within 6 months.
Not every lender will do 203K loans, so you may need to check with more than one. I have had clients do complete remodels with this program and others have simply replaced windows! It can be a great way to get a new home that needs a little bit of work!
Leslie Vanderwerf, NMLS ID#335509, Summit Mortgage - Email – Website
