FHA 203k Renovation Loan

[Jerry Padilla]

For more info on FHA Financing;

FHA Financing

FHA 203k Product Overview

LTV Requirements: Maximum of 110%

1-2 units allowed (3-4 units by exception only)

The Limited 203(k) may only be used for minor remodeling and non-structural repairs.

The Limited 203(k) does not require the use of a 203(k) Consultant, but a Consultant may be used.

There is no minimum rehabilitation cost.

Maximum number of contractors: 3

Repair Limits

• Renovation Total can be up to $35,000 in cosmetic repairs.
• This amount includes: 10% contingency reserve and all fees and costs listed in the fee section.
• Exceptions are not allowed to exceed the repair amount.
• Borrower is not allowed to fund overage.

Allowable Repairs

- Repairs and final inspection completed lesser of 180 days or as approved by the Renovation department

- Maximum repairs $35,000 (inclusive of all financed renovation fees). NO Exceptions.

- Roof: repair or replacement (covering, underlayment)

- Gutters/downspouts: install/repair/replace

- Insulation: ceilings/walls/asbestos removal

- Siding/windows/doors

- Paint: interior/exterior/lead paint abatement

- Kitchen: all appliances/cabinets/ total

- Electrical: repair/replace/recondition all

- Plumbing: repair/replace/recondition all

- Repair/Replace HVAC or other systems

- Repairing or removing an in-ground swimming pool

- Installing or repairing fences, walkways and driveways

- Flooring/subflooring/tile/carpet/wood

- Termite treatment/damage repair

- Repairing or replacement of well and septic- *See appraisal section of the guidelines for specific requirements

- Weatherization items/repairs/ improvements

Non-Allowable Repairs

- Structural or requiring engineers report or requiring blueprints

- Repairs performed by the borrower

- No Detached Garages

- No Swimming Pool Installations. Pool Repairs are allowed.

- Improvements that do not conform to the surrounding neighborhood

- Repair cost that exceeds $35,000. NO Exceptions.

- Any new construction including room additions.

- Landscaping or similar site amenity improvements.

- Any repair or improvement requiring a work schedule longer than six months.

- Rehabilitation activities that require more than two payments per specialized contractor.

- Major rehabilitation or major remodeling.

- Required repairs arising from the appraisal that Necessitate a “consultant” to develop a Specification of Repairs/Work Write-Up.”

- Require plans or architectural exhibits.

- Results in work not starting within 30 days after loan closing.

- Borrower is unable to occupy at closing or within 30 days.

- Television antenna and satellite dishes.

- Additions or alterations for commercial use.

- SFR conversion to a 2 unit

Contingency Reserve

- 10% of the cost of rehabilitation

- Properties where the utilities are turned off will require a 20% contingency.

Permits

- If permits are required to complete the improvements, you must have permits prior to any subsequent draws after settlement. No Exceptions

Borrower Acknowledgment

- Parties listed below are not eligible to perform the work:

- Borrower

- Family Member

- Borrowers Employer

- Seller

- Realtor

- Any Interested party to the transaction

A family member is not allowed to originate or be involved in the loan process

- Family member as defined below:

- Child (son, stepson, daughter, stepdaughter)

- Spouse

- Parent (includes step-parent or foster parent)

- Grandparent (includes step-grandparent or foster grandparent)

- Legally adopted son or daughter, including a child who is placed with the borrower by an authorized agency for legal adoption

- Foster child

- Brother/stepbrother

- Sister/stepsister

- Uncle

- Aunt

- In-laws

Fees

- Single Fee: $550

Conforming Loan Amounts

- Maximum loan amount as determined by FHA (Conforming Loan Limits depending on location and number of units - below)

- Each county has its own individual area limit https://entp.hud.gov/idapp/html/hicostlook.cfm

High Balance Loan Amounts

- Maximum loan amount as determined by FHA (High Balance Loan Limits depending on location and number of units - below)

- Each county has its own individual area limit (refer to the following HUD website) https://entp.hud.gov/idapp/html/hicostlook.cfm

Upfront MIP

- 1.75% of the Base Loan Amount

Monthly MIP

Mortgage Term of More Than 15 Years Base Loan Amount	LTV	MIP	Duration
Less than or equal to $625,500
≤ 90.00%	.80	11 Years
> 90.00% but ≤ 95.00%	.80	Mortgage Term
> 95.00%	.85	Mortgage Term
Greater than $625,500
≤ 90.00%	1.00	11 Years
> 90.00% but ≤ 95.00%	1.00	Mortgage Term
> 95.00%	1.05	Mortgage Term

Mortgage Term of Less than or Equal to 15 Years	LTV	MIP	Duration
Less than or equal to $625,500	≤ 90.00%	.45	11 Years