Renovations for Buyers!
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203-K Program
Renovation loans allow a PURCHASE or REFINANCE of a property and include the cost of renovations as a part of the mortgage. The mortgage amount is based on the PROJECTED VALUE of the property after the work has been completed. The FHA 203K loan is one of the very few programs to help borrowers with properties that will need work to qualfiy. This program is not eligible if you don't plan on living in the property as your primary residence. This program is not eligible on Investment or Second Homes.
- Min. Credit Score is a 640 median of all three bureaus
- 203K program allows for property of 1-4 family owner occupied
- Borrowers Allowed up to 6% sellers assistance
- FHA minimum required down from borrower is 3.5% of their own funds or gift of total loan amount
- Work must Start within 30 days after closing
- Work must be completed within 6 months from closing
- Any changes to plan after closing must be approved prior to change
- Any use of contingency fund on Full 203k must obtain prior approval
- Appraiser must show AFTER IMPROVED Value and subject to plans and specs
- Borrower selects contractor subject to FHA requirements. Contractor must provide the following:
Contractor Items Needed
- Evidence of 1 million dollar liability insurance
- 3 recent job references (may not be needed)
- Copy of Contractor License
- Sign Homeowner/Contractor Agreement
- Sign Plan Review - If Consultant is Needed
Process:
Full 203-k with Consultant
- The consultant should first sit down with you to determining your needs and wants for the home
- Consultant evaluates the property to determine repairs required to meet HUD and Code guidelines
- The consultants workup sheet is used by the Appraiser in determining value & Consultant's work Write up is used by General Contractor to Bid the job
- Contractor Proposal & Plan review must be received by West Penn Financial prior to ordering the appraisal
- Contractor & Plan Review must match, and therefore it is strongly recommended the contractor and plan reviewer visit property at the same time
- Applicant must pay consultant at the time of review
Streamline 203-K
- Must be uncomplicated rehabilitation and/or improvements to a home for which plans, consultants, engineers or architects are not required
- We Define uncomplicated as 1 type of improvement/repair plus appliances
- Cost cannot exceed $15,000 in most cases depending on repair
- Inspection by third party is required (Appraiser)
- Contractor must provide detailed written bid and meet HUD contractor requirements detailed above
- No More than 2 payments to each contractor. (General Contractor Preferred if Multiple jobs)
- First Payment shall not be more than 50% of the cost of all repairs
- When Utilities are off – Streamline 203-k Not permitted - Must be switched to a Full 203K
- Ineligible repair items
- Room Additions
- Relocation of load-bearing walls
- Structural Damage
- Landscaping
- Repairs That prohibit the mortgagor from occupying the property immediately after closing - This would be a Full 203K for these repairs.
Additional requirments may be needed to obtain this loan.
Contact Anthony Today to find out if this program is right for you!