The FHA 203(k) Renovation Mortgage – Take Advantage of the Foreclosure Market!

Attention home buyers!  Are you interested in a fantastic way to take advantage of all of those homes we find in the Louisville, KY real estate market that need minor repairs or updates?  Especially all of the homes that are returning to the market as foreclosures?  Thankfully, the FHA offers a wonderful program designed to help owner-occupants purchase a home that needs renovations.  The program’s formal name is the FHA 203(k) Loan, and the specific version that should most interest typical home buyers it the Streamlined (k) program.

Why is this FHA loan program so special and what benefits can it bring to you as a potential home buyer?  First and foremost, buying a home with an FHA loan usually requires that the home be able to pass an FHA inspection and be in a safe, occupiable condition.  That of course eliminates numerous homes that we find on the market today because many foreclosures have trouble passing an FHA inspection.  With the Streamlined (k) program, the FHA will allow you to purchase a home that needs updating and will actually lend you the money to make the improvements!

Here is a complete list of the repairs the FHA will allow if you utilize the Streamlined (k) Renovation Loan:

  • Repair/Replacement of roofs, gutters and downspouts
  • Repair/Replacement/upgrade of existing HVAC systems
  • Repair/Replacement/upgrade of plumbing and electrical systems
  • Repair/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, weather stripping, etc.
  • Purchase and installation of appliances, including free-standing ranges, refrigerators, washers/dryers, dishwashers and microwave ovens
  • Accessibility improvements for persons with disabilities
  • Lead-based paint stabilization or abatement of lead-based paint hazards
  • Repair/replace/add 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
  • Septic system and/or well repair or replacement

This is a list of repairs not authorized under the FHA 203(k) Loan program:

  • Major rehabilitation or major remodeling, such as the relocation of a load-bearing wall
  • New construction (including room additions)
  • Repair of structural damage
  • Repairs requiring detailed drawings or architectural exhibits
  • Landscaping or similar site amenity improvements
  • Any repair or improvement requiring a work schedule longer than six (6) months
  • Rehabilitation activities that require more than two (2) payments per specialized contractor

In addition to the above requirements, the FHA specifies a cost ceiling of $35,000 for the allowable repairs, plus there are very specific guidelines you must follow regarding property eligibility and borrower qualifications.  You may review the complete requirements for the program here.

If this program sounds like it may interest you or help you buy the home of your dreams, contact me, and let’s sit down and discuss your options.  I would be honored to help!!

This post was inspired by Patricia Dewitt of 5/3rd Bank.  She can be contacted at 502.417.6390.  She would be happy to help you with all of your mortgage needs.  Please let her know where you found her name!

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