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 the property 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 the number of units. A complete rehab as long as the entire foundation system remains in place. Condos-no structural work-no more than 4 units per building-Must be FHA 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 plus improvements. (this limit varies depending on the county 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 as remodeling of kitchens and bathrooms). Elimination of health and safety hazards such as lead paint, mold etc. Changes for aesthetic appeal and elimination of obsolescence (new exterior 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 the dollar 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 Bathhouses Dumbwaiters 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 not financed. Hazard Insurance-Must be sent with submission package if PITI is being financed. Renovation Review-48 hours after final approval. Fee Sheets-72 hours prior to closing in order to meet the time frames for renovation review

What else do I need to know? 1. FHA down payment of 3.5% applies! 2. You can finance up to 6 months of the mortgage payment into loan if the property is inhabitable during the construction phase. (so you won’t have double housing cost during repairs)

How do I get started? Getting started is the easy part! 1. Search for a property within your budget in the neighborhood you want. 2. Have an open mind to potential changes in the homes you’re shown. a. Think of what each home would look like with your changes in mind. b. Discuss with your Realtor necessary improvements opposed to your wish list. c. Consider the amount of work needed and the cost associated. 3. Contact our team to start the process: We will assign: 203K consultant An inspector Contractor to provide a quote for repairs needed Think about turning the homes on the “maybe” list into the home of your dreams. It can happen – we’re here to guide you.

Beth Repta Realtor @ Properties 847-668-2384

Don McCartney Loan Officer DM Financial 847-727-9312

Sheila Malchiodi Restoration Contractor QCi restoration 847-489-2943

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