The FHA 203K Loan Program is through the HUD Department. It is for rehabilitation and repair of a single family properties and revitalization of the neighborhood. HUD believes this could be a great to be used for a home improvement loan.
What Can The 203K Loan Be Used For?
1. This progam can be used to accomplish rehabilition and/or improvements of an existing one-to-four unit dwelling in one of three ways:
a. To purchase a dwelling and the land on which the dwelling is located and rehabilitate it.
b. To purchase a dwelling on another site, move it onto a new foundation on the mortgaged property and rehabilitate it.
c. To refinance existing indeptedness and rehabilitate a dwelling.
What is the minimum amount of repairs required on a FHA 203K Home Improvement Loan?
There is a minimum $5,000.00 requirement of eligible home improvement loan projects on the existing structure of the property. Minor or cosmetic repairs may be included after meeting the first $5,000.00 worth of repairs.
What are some of the repairs that qualify for the first $ 5,000.00?
Structural alterations and reconstruction: (Repairs or replacement of structural damage, chimney repair, addition to the structure, installation of bath(s), skylights, finished attic and/or basements, repair of termite or the treatment against termites) Elimination of health and safety hazards. Changes for aesthetic appeal, Add air condition or replacement of Heating unit. Installation of well or septic system or connection to the public utilities. Roof, Gutters and Downspouts, Flooring, Tiling, Carpeting, Major Landscaping and site improvements.
Improvements to improve accesibility and function for the disabled.
What are the qualifications to be able to obtain a FHA 203K Loan?
The qualifications requirements are the same as a typical FHA Mortgage Loan. The only additional item that the borrower needs is either enough cash reserved to pay for material and labor until they are reimbursed through a draw, or a credit card with adequate available balance. if there is to be a contractor involved, the contractor may choose to cover these costs. There will be some links to lenders who will answer more of these guestions.
Can I pick my own Contractor to do the work?
You may decide on your own contractor, and they should be brought int the process in the beginning stage of the process. Check out the credentials of the contractor thoroughly, making sure he is knowledgeble in all aspects of rehabilitation work. Make sure there is adequate Insurance coverage.
The home improvement or repairs need not be made before moving into the property, dependig on how extensive the repairs are and whether the house is habitable while the repairs are being made.
Other obtions available.