FHA 203k Home Improvement Refinance

Most homeowners think of a home equity loan or second mortgage when considering how to finance a home improvement project.

The problem with many alternative home renovation refinance mortgage programs is that they are usually associated with higher fees and interest rates, as well as challenging qualifying guidelines.

An FHA 203k Loan is a popular option for a home improvement loan due to the flexible approval criteria, high loan-to-value / after repair value considerations, and lower interest rates that are fixed for 15 or 30 years.

The main benefit with an FHA 203k Refinance is that a homeowner can use an "After Repair Value" in order to receive between $5,000 - $35,000 to renovate a home.

And, since there are no pre-payment penalties associated with FHA loans, it is possible to refinance or sell as soon as the new higher value has been realized as a result of the property improvements.

Additionally, any Energy Efficient Improvements that are made can increase the amount of money a homeowner receives for upgrades.

FHA requires that properties financed under the 203k program meet certain basic energy efficiency and structural standards to comply with HUD's Minimum Property Standards and all local codes and ordinances.

A Few Examples Of Allowable Upgrades

• Repair or replacement of roofs, gutters and downspouts
• Repair, replacement or upgrade of existing HVAC systems
• Repair, replacement or upgrade of plumbing and electrical systems
• Repair or replacement of flooring
• Minor remodeling, such as kitchens, which does not involve structural repairs
• Painting, both exterior and interior
• Weatherization, including storm windows and doors, insulation, and weather stripping
• Purchase and installation of appliances (free-standing ranges, refrigerators, washer/dryer...)
• Accessibility improvements for persons with disabilities
• Lead-based paint stabilization or abatement of lead-based paint hazards
• Repair, replacement or addition of 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
• Repair or replacement of septic system and/or well