The FHA 203k loan program gives the best flexibility for purchases or refinances for homes that need repairs or renovations. The required down payment is 3.5% with $500 of the borrower’s own funds. The remaining funds can be gifted by a family member.
THE FHA 203K IS FOR PRIMARY RESIDENCE ONLY, NO INVESTORS ALLOWED.
Property Type & Loan Limits Include:
- Single Family/Townhome/Condo: up to $410,000;
- 2 Unit: up to $524,850;
- 3 Unit: up to $634,450;
- 4 Unit: up to $788,450.
FHA will lend money based on the purchase price plus the cost of construction. It is one loan. For a 203k Streamline Loan, $29,000 or less in construction costs is required to qualify. Typically, any structural work or work costing greater than $29,000 is required for a Full 203k Loan.
Full 203k loans require an FHA approved consultant who guides you through the entire construction process. The consultant is the first person a buyer would meet once they have a contract on a home. The construction work would begin shortly after the seller transfers the property to you and would need to be completed within 6 months.
Streamline Construction/Renovation allowed:
- Repair/Replace roofs, gutters, downspouts
- Upgrade existing HVAC systems, plumbing, electrical systems, and flooring
- Kitchen remodels
- Weatherization including storm windows, doors, insulation, weather stripping
- Purchase/installation of appliances, including freestanding ranges, refrigerators, washers/dryers, dishwashers and microwave ovens
- Accessibility improvements for persons with disabilities.
- Painting, both exterior and interior.
- 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
- Lead-based paint stabilization or abatement of lead-based paint hazards
Full 203K Work allowed:
- Includes all items listed above as well as:
- Major rehabilitation or remodeling such as the relocation of a load-bearing wall
- New construction on room additions
- Repair of structural damage
- Repairs requiring detailed drawings of architectural exhibits
- Landscaping or similar site amenity improvements