Full FHA 203k Structural Home Renovation Loan

The Standard 203k was created specifically for projects that warrant extensive work or repairs, projects that will take longer than six months to complete, or when rehab costs will exceed $35,000

Additionally, Standard 203k loans have no maximum repair amount.

The Standard (k) loan option must be used when a property requires (or the borrower requests) structural work, such as a room addition or the removal or relocation of an interior or exterior wall.

A Standard 203k is also used if the project requires engineering or exterior grading or inspections.

The Standard 203k must be used if the renovation work will prohibit the homeowner from occupying the residence during the process. If the home is considered uninhabitable, up to six months of mortgage payments can be financed to cover monthly loan payments during the renovation process and help the homeowner pay for alternate housing during construction.

FHA-Designated Consultant Required on a Standard 203k

On a Standard 203k loan, FHA requires that an FHA-designated Consultant create and document a work plan before they will approve the loan.

The Consultant’s job is to ensure that the work meets FHA and local building code requirements.

The maximum mortgage amount allowed for a standard 203k is based on whichever is less:

• The as-is value of the property plus the costs of repair and rehabilitation, or
• 110% of the projected value of the renovated property

All 203(k) programs allow borrowers to finance the purchase price of the property, the closing costs, plus the cost of repairs. A stipulation for both types of 203(k) loans is that the total amount financed must not exceed 110% of the projected, “as-improved” value.

Page Tags: FHA 203k Full | Standard 203k Loan | Structural 203k Rehab Loan