Articles Tagged With: FHA 203k Mortgage

July 25, 2017

What Can I Improve With An FHA 203(k) Mortgage?

An FHA 203(k) mortgage is basically a rehab loan, which can be used as a new purchase loan or a refinance loan for the purpose of repairing/rehabbing an eligible property. The FHA single family home loan handbook, HUD 4000.1, has a list of requirements and guidelines for FHA 203(k) loans, which includes a set of allowable improvements as well as a list of things FHA loan money cannot be used for. Let’s examine what is permitted with an FHA 203(k) loan first. Borrowers who are approved for an FHA rehab loan may use the loan for any of the following projects acceptable to the lender: – costs of construction, repairs and rehabilitation; – architectural/engineering professional fees; – the 203(k) Consultant fee subject to the limits in the 203(k) Consultant Fee | more...

Refinancing a Second Home With An FHA Mortgage Loan

July 7, 2017

Who Qualifies For FHA Loans?

By Joe Wallace

Who qualifies for an FHA mortgage loan? There are lots of misconceptions about this-some people think FHA mortgage loans are only for first-time home buyers, others might wrongly think FHA loans are only for people who can’t afford a conventional mortgage. But the truth is much different-FHA loans require borrowers to financially qualify, but there are not restrictions on who can apply when it comes to past home ownership, “maximum income” or other factors. FHA Loans Are For First-Time Home Buyers AND Those Purchasing Homes Again That’s correct. FHA mortgage loans don’t, under the basic rules of the program itself, favor first time home buyers with different terms than those who are purchasing another home. Second, or even third-time home buyers can get the same benefits of an FHA mortgage | more...

December 28, 2016

Buying HUD Homes With FHA Loans

By Joe Wallace

On the FHA/HUD official site, there is a section covering the purchase of HUD homes, including tips on which FHA home loan might be best for these transactions. According to the Department of Housing and Urban Development official site, “A HUD home is a 1-to-4 unit residential property acquired by HUD as a result of a foreclosure action on an FHA-insured mortgage. HUD becomes the property owner and offers it for sale to recover the loss on the foreclosure claim”. These homes are offered for sale via HUD. Who is qualified to buy one of these properties? According to HUD.gov, “Anyone who has the required cash or can qualify for a loan (subject to certain restrictions) may buy a HUD Home. HUD Homes are initially offered to owner-occupant purchasers (people | more...

November 23, 2016

FHA 203(k) Loan Rules: A Reader Question

By Joe Wallace

A reader asks, “I’m attempting to buy a mixed use residential/commercial property through an FHA 203(k) loan, and the building meets the size requirements. The commercial section is drywalled and spackled with plywood flooring. The residential section is in compliance, but the FHA appraiser listed a bunch of things needed in the commercial section, like a washroom, finished flooring, and baseboard.” “Where did they come up with this list? Is this a requirement for getting the loan? Ill have to make the seller do these things before the sale since I cant do any 203k work on the commercial section, so how do I know what is expected in the commercial section? The HUD doc says nothing on this.” FHA 203(k) loans are also known as “fixer-upper” loans, but even | more...

Can I buy a manufactured home with an FHA loan?

June 22, 2016

Are You Ready For An FHA Mortgage?

By Joe Wallace

A recent CNN Money article reveals that more than 10 million Americans spend half their income on rent. It’s a figure (based on a 2014 study at Harvard) that is surprising to some, and motivating for others. Are you considering an FHA mortgage as an alternative to high rents? FHA home loans have features that can be very helpful to those in the market for a new home. Consider the down payment requirement for an FHA mortgage compared to many conventional loans and it’s easy to see that the FHA’s 3.5% down payment requirement compared to between 10% and 20% down for conventional mortgages depending on the lender and the borrower’s financial qualifications. The lower down payment is one factor; another is the borrower’s ability to refinance an FHA mortgage | more...

December 24, 2015

FHA Appraisal Standards: “Ordinary” Home Purchases Versus Fixer-Uppers

By Joe Wallace

One good question that comes our way in the comments section from time to time involves the difference between an ordinary new home purchase loan or FHA mortgage and the purchase of a fixer-upper with an FHA rehab loan. If appraisal standards for FHA loans include minimum property requirements, how can a fixer-upper be purchased with an FHA mortgage? After all, the nature of a fixer-upper loan is that you take a property that is in need of rehab or repairs and bring it up to standards. How can a fixer upper pass an FHA appraisal? Fortunately, this issue is addressed in HUD 4000.1, which includes the following: “As the on-site representative for the Mortgagee, the Appraiser provides preliminary verification that a Property meets the Property Acceptability Criteria, which includes | more...

September 16, 2015

FHA Rehab Loans: The Rules For 203(k)

By Joe Wallace

In a recent blog post we discussed the basics of the FHA 203(k) Rehab loan. This is a type of FHA loan that allows borrowers to repair a property being purchased with an FHA mortgage or to repair an existing home that was purchased previously. According to the FHA official site, the home to be rehabbed with an FHA 203(k) must be at least one year old. “A portion of the loan proceeds is used to pay the seller, or, if a refinance, to pay off the existing mortgage, and the remaining funds are placed in an escrow account and released as rehabilitation is completed. The cost of the rehabilitation must be at least $5,000, but the total value of the property must still fall within the FHA mortgage limit | more...

What if my home was damaged in a natural disaster?

September 15, 2015

FHA 203(k) Rehab Loans

By Joe Wallace

Not all borrowers want to get an FHA home loan for a home that is perfect and fully ready to occupy. Some are interested in fixer-upper properties, and we commonly receive reader questions in our comments section about them. Here’s a good example of a recent query: “… If I was interested in purchasing a property below market value and having a contractor repair the existing home on the property is there a loan that could potentially work in this situation?” The FHA/HUD official site has a page of information about the FHA 203(k) rehab loan that addresses this issue directly. According to the FHA official site: “Section 203(k) fills a unique and important need for homebuyers. When buying a house that needs repair or modernization, homebuyers usually have to | more...

February 23, 2015

What Is The FHA 203b Loan? A Reader Question

By Joe Wallace

A reader asks, “We are looking to purchase a HUD house that needs a lot of work– sewer system, plumbing, ceilings repaired. The electrical seems to be ok. Would an FHA 203b loan be available in addition to the traditional FHA loan? If the 203b is available, how does it work in terms of repayment?” The FHA/HUD official site says this about the FHA 203b loan: “What is the purpose of this program? To provide mortgage insurance for a person to purchase or refinance a principal residence. The mortgage loan is funded by a lending institution, such as a mortgage company, bank, savings and loan association and the mortgage is insured by HUD. What are the eligibility requirements? The borrower must meet standard FHA credit qualifications. The borrower is eligible | more...

January 20, 2015

Streamlined FHA 203(k) Rehab Loans

By Joe Wallace

Recently we posted about the FHA 203(k) rehab programs. Did you know there is an option for borrowers who want to take advantage of an FHA Streamline loan but don’t have extensive repairs to do? This option is known as the FHA Streamlined 203(k), and is described on the FHA official site as follows: “FHA’s Streamlined 203(k) program permits homebuyers and homeowners to finance up to $35,000 into their mortgage to repair, improve, or upgrade their home. Homebuyers and homeowners can quickly and easily tap into cash to pay for property repairs or improvements, such as those identified by a home inspector or an FHA appraiser.” “Homeowners can make property repairs, improvements, or prepare their home for sale. Homebuyers can make their new home move-in ready by remodeling the kitchen, painting | more...