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What is a 203K Loan

What is a 203K Loan

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Published by Beth Boerman Repta

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Published by: Beth Boerman Repta on Mar 17, 2011
Copyright:Attribution Non-commercial


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What is a 203K Loan?
A 203K loan is FHA’s primary program for the rehabilitation and repair of single family properties. The borrower can get just one mortgage for theproperty and the rehabilitation/repair.
What properties are eligible?
1-4 Family completed for at least 1 year
Conversion of multi-unit dwelling decreasing or increasing thenumber of units.
A complete rehab as long as the entire foundation system remains inplace.
Condos-no structural work-no more than 4 units per building-Must beFHA approved.
No mixed-use properties allowed.
Owner occupied only.
What are the stipulations?
Minimum $5000 of repairs.
Maximum is FHA loan limit for price of home plusimprovements. (this limit varies depending on thecounty of the home)
Requires a consultant - we provide for you!
Multiple inspections - we provide for you!
Contingency reserve required.
Work to be performed by approved contractor of finance company.
No up-front money is given to General Contractor.
Borrower can not be General Contractor.
Borrower can not get paid for any work done.
What repairs/renovations are acceptable for this loan?
Additions to current structure.
Paint, carpet, tile etc.
Finishing of a basement.
Weatherization including storm windows, doors etc.
Changes for improved functions and modernization (such asremodeling of kitchens and bathrooms).
Elimination of health and safety hazards such as lead paint, mold etc.
Changes for aesthetic appeal and elimination of obsolescence (newexterior siding).
Replacement or reconditioning of any systems (i.e. plumbing,heating, electrical etc).
Connection to public water or sewer.
Energy improvements.
Major landscape work (i.e. patios that improve the value equal to thedollar spent).
Handicap accessibility.
Roofing, gutters, downspouts.
New appliances (used are not allowed).
Construction or rehab of detached structure.
What is not allowed?
Homes that have never been completed
Cooperative units
Non-owner occupied
Non-profit companies
BBQ Pits
Exterior hot tubs
Saunas, spas and whirlpool baths
Outdoor fireplaces or hearths
Swimming pools
TV antennas and satellite dishes
Tennis courts
Additions/repairs for commercial use.
What it the time frame?
Typical closing time is 45-60 days from contract.
Work must start within 30 days of closing.
Project to be completed within 6 months of closing.
Further Details…
Contractor Information required-3 weeks prior to closing.
Hazard Insurance- required 2 weeks prior to closing if PITI is notfinanced.
Hazard Insurance-Must be sent with submission package if PITI isbeing financed.
Renovation Review-48 hours after
final approval.
Fee Sheets-72 hours prior to closing in order to meet the timeframes for renovation review

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