Standard FHA 203K -

Why use the standard 203K?

The standard 203K is used when the repairs include structural work or the amount of repair exceeds $30,000.

An FHA fee consultant must be hired..

The fee consultant helps you determine if your project is feasible and if your contractor’s quote is realistic.

The fee consultant can also advise you if additional repairs are likely to be required by the FHA appraiser.

Find a local fee consultant

Consultant Duties

Inspect the property to insure:
– there are no rodents, dry rot, termites and other infestation on the property
– there are no defects that will affect the health and safety of the occupants
– the adequacy of the existing structural, heating, plumbing, electrical and roofing systems
prepare a report on the current condition of the property and identify any deficiencies that exist in the electrical, plumbing & heating systems, the roof and/or structure of the home. The consultant must determine the repairs/improvements that are required for the property to meet the Department of Housing and Urban Development (HUD)’s Minimum Property Requirements (your contractor will need to include a remedy to any deficiencies in his/her bid)
The consultant prepares a work write-up and cost estimate to confirm the work being performed per the project proposal is complete and feasible.
The consultant inspects the work for completion and quality of workmanship at each draw request.

Eligible Properties: 1-4 family primary residence

 HUD owned properties (single family only) are allowed
 For properties recently built, must have Certificate of Occupancy for at least one year
 Manufactured home are NOT eligible

203K can be used for purchase or refinance

Purchase Transactions

Here is the math for 203K loans: Sales Price + Rehab Account = Acquisition Cost.

Rehab account = amount needed to do repairs + 10-15% contingency + fees

Down Payment (3.5%) is based on Acquisition Cost

At closing Seller is paid and home transfers to Buyer. Rehab funds are now available to complete your project!

Refinance Transactions

Here is the math for 203K loans: pay off of existing mortgages + rehab account + financed closing costs = new loan amount

Rehab account = amount needed to do repairs + 10-15% contingency + fees

You can borrow up to 100% of the appraised value! Appraisal done based on completed value (value of the house after all work is complete)

At closing current mortgage(s) are paid off and rehab funds are now available to complete your project!

Eligible Improvements

Repair/replace:

roofs & gutters

heating and a/c units

plumbing and electrical systems

flooring

appliances

windows, doors & siding

septic systems

wells

exterior and interior paint

Other Repairs you can do with a standard 203k loan

 Weatherization: including storm windows and doors, insulation, weather stripping, etc.

 Improvements for accessibility for person with disabilities

 Lead based paint stabilization or abatement of lead based paint hazards

 Basement refinishing and remodeling, which does not involve structural repairs

 Basement waterproofing

 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

 Repair or removal of an in-ground swimming pool

 Install smoke detectors

 Detached garages if there is no attached garage

 Conversion to decrease number of units

 Site improvements, landscaping, patio’s, decks and terraces allowed but must increase the as-is value equal to the cost of the repair or be required to meet minimum property standards

Standard FHA 203K