203 (k) Renovation Mortgage
Consultant (k) & Streamline (k)
Terms in this set (16)
What is an FHA 203 (k) loan?
It is a mortgage loan that allows a borrower to purchase or refinance and rehabilitate a property with one closing.
What is the loan amount based on?
The projected market value of the property when all the repairs are completed.
What aspects of the 203 (k) differentiates it from the 203 (b) loan program?
Properties that are sold "As Is" often would not qualify for a 203 (b) standard FHA loan. However, 203 (k) loans are designed to improve, update and modernize the home.
Can 203 (k) loans be used to purchase homes that do not require repairs?
Yes, they can be used to finance the cost of "modernization" or cosmetic repairs.
203 (k) loans can be used in conjuncture with the FHA Energy Efficient Mortgage. What are the eligibility requirements for the FHA EEM program.
The total cost of improvements can be included in the borrower's mortgage only if their total cost is less than the total dollar value of the energy that will be saved during their useful life.
What property types are eligible?
1-4 unit family dwellings as well as mixed-use properties.
Is it possible to use a 203 (k) loan to convert a single family dwelling into a 2-4 unit property?
Yes, and vice versa.
What is used as a basis for mortgage calculations?
110% of the as-improved value of the home.
How many mortgage payments can be financed into the loan?
6 months on Consultant k only.
A buyer just bought a property with cash. What options are available because of the 203 (k)?
The buyer can complete repairs/modernization and replenish funds used at the time of purchase.
What options are available to those looking to refinance?
The refinance of a purchase of a HUD PD property acquired within 6 months may be calculated as if it was a purchase.
To what extent can a person repair a property using a 203 (k) loan?
The 203 (k) loan can be used for complete reconstruction of a home on its original foundation.
What options are available for borrowers looking to increase the square footage in a house?
The 203 (k) loan can be used to build an addition, construct a second floor, or finish a basement or attic space.
What terms are available on 203 (k) loans?
30 year fixed only.
What differentiates a Streamline K from a Consultant K?
A Streamline K is intended for quicker, easier renovations that are non-structural in nature and do not exceed $35,000 in total rehabilitation costs, while a Consultant K allows for more extensive work to be done and requires more supervision throughout the process.
What is the minimum repair cost associated with each 203 (k)?
There is a minimum of $5000 that must be done for Consultant K, and there is no minimum for the Streamline K.