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FHA 203K and HomePath Renovation questions

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Darren Levene

Real Estate Agent from New York City, New York

Dec 11 '13, 06:42 PM


Do these loans cover 'all' types of renovations OR just 'some' renovations. Example: Let's say I want to convert a 2bdrm into a 4bdrm by turning a porch and a dining room into legal bedrooms (they would meet legal bedroom requirements). Would they except these types of renovations? For 203K, I found this and don't see it listed there: For Homepath, I can't find a list.

http://203kcontractors.com/faqs#repairs

If they don't cover those types of renovations, what other options would be available to me for funding the refurb by a lender?



Jesse Gonzalez

Residential Loan Broker from Santa Rosa, California

Dec 12 '13, 01:07 PM


The 203K allows the following, per HUD's website.

Eligible Improvements

The homeowner can use the 203(k) program to finance such items as painting, room additions, decks and other items even if the home does not need any other improvements. All health, safety and energy conservation items must be addressed prior to completing general home improvements.

B. Cost of Rehabilitation. Expenses eligible to be included in the cost of rehabilitation are materials, labor, contingency reserve, overhead and construction profit, up to six (6) months of mortgage payments, plus expenses related to the rehabilitation such as permits, fees, inspection fees by a qualified home inspector, licenses and consultant and/or architectural/engineering fees. The cost of rehabilitation may also include the supplemental origination fee which the mortgagor is permitted to pay when the mortgage involves insurance of advances, and the discounts which the mortgagor will pay on that portion of the mortgage proceeds allocated to the rehabilitation.



Wayne Brooks

West Palm Beach, Florida

Dec 12 '13, 01:52 PM


Stay with the 203K. Homepath is only available on FNMA owned REO's, they are generally over priced, which is okay for a regular Homepath loan (no appraisal) but Homepath renovation requires appraisal just like 203k.



Darren Levene

Real Estate Agent from New York City, New York

Dec 12 '13, 02:46 PM


Thanks for the feedback guys. Do you know if the 203K streamlined will also cover the room additions? Or only the regular 203K? I think the streamlined will suffice just fine for me if it covers those types of upgrades as I don't plan on doing over 35K in renovations.



Jesse Gonzalez

Residential Loan Broker from Santa Rosa, California

Dec 12 '13, 03:13 PM


Why do you need a Streamlined loan? You can only streamline an existing fha loan and I'm ignorant to whether you can streamline a 203K, but I'm going to say you can't because they'll want an appraisal to reflect the fixed up value.



Ahmed Porter

Contractor from washington, Washington D.C.

Dec 12 '13, 06:38 PM


I am a contractor and if you can get a stream line get it over a 203K reason stream line they were giving you 50% upfront to start the renovation. I think some stream line have changed to 1/3 but the cost of the renovation will be less with a stream line .Reason contractor does not have to fund job if its a 203K contractor fund job and gets his money back from the bank once work is done so the bid is marked up to reflect that but still the interest rate on the loan still makes it worth it. Use a contractor who has done a few 203 k renovation and you can be very creative with the build to get a lot of things done,but safety and code items will allways have to be done first on these loans.



Darren Levene

Real Estate Agent from New York City, New York

Dec 12 '13, 09:53 PM


Jesse, I could be wrong here since I'm just beginning to investigate things. But, if I understand correctly from the research I'm doing online, the 203K streamlined can be used to purchase a new home. It's advantage over the regular 203K are explained here:

"The Streamlined 203k is designed for less extensive improvements and for projects that will not exceed a total of $35,000 in renovation and related expenses. This version does not require the use of a consultant, architect, and engineer or as many inspections as the Standard 203k. As a result, when applicable, the Streamlined 203k generally becomes the simpler, less costly option".



Jesse Gonzalez

Residential Loan Broker from Santa Rosa, California

Dec 13 '13, 11:06 AM


I misunderstood your question, you're absolutely correct on the amount of money and inspection requirements. You may have issues with the type of construction you're looking at completing with the streamline though. The below is an excerpt from one lender's guidelines, I haven't checked directly with HUD on this so I can't say for certain if it's a HUD guideline or investor specific overlay, but I'd lean more toward the former.

Ineligible improvements:

Improvements for this program are limited and can not include any major rehabilitation or remodeling, new construction such as a room addition, repairs to structural damage, site amenity improvements, landscaping or luxury items (i.e. Pools, Jacuzzis, TVs, etc…)

? Modifications that change the layout of the house (i.e. adding or removing walls to create or expand rooms or adding a bathroom)

? No structural changes



Jesse Gonzalez

Residential Loan Broker from Santa Rosa, California

Dec 13 '13, 11:07 AM


I misunderstood your question, you're absolutely correct on the amount of money and inspection requirements. You may have issues with the type of construction you're looking at completing with the streamline though. The below is an excerpt from one lender's guidelines, I haven't checked directly with HUD on this so I can't say for certain if it's a HUD guideline or investor specific overlay, but I'd lean more toward the former.

Ineligible improvements:

Improvements for this program are limited and can not include any major rehabilitation or remodeling, new construction such as a room addition, repairs to structural damage, site amenity improvements, landscaping or luxury items (i.e. Pools, Jacuzzis, TVs, etc…)

Modifications that change the layout of the house (i.e. adding or removing walls to create or expand rooms or adding a bathroom)

No structural changes



Darren Levene

Real Estate Agent from New York City, New York

Dec 13 '13, 07:55 PM


Yes, thanks for your assistance !



David Beard

Real Estate Investor from Cincinnati, Ohio

Dec 13 '13, 08:06 PM


The Fannie reno loan is called Homestyle, you can check that out. This is your personal residence, correct?



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