203k FHA Consultant
203K FHA consultant serving West Virginia, Virginia, Maryland, Pennsylvania, and Ohio
The FHA’s 203(k) Rehabilitation Mortgage Insurance Program is designed to finance the renovation or refinancing and repairing of homes, catering to those who want to remodel or make energy-saving improvements.
There are two program options:
Standard 203(k):
For major structural repairs exceeding $5,000. No cap on renovation costs, and an FHA-approved 203(k) consultant’s involvement is necessary.
Limited 203(k)
For minor, non-structural repairs up to $35,000. A consultant’s help is optional but can be beneficial.
The 203(k) Consultant plays a vital role, acting as a mediator between homeowners, contractors, and lenders. They inspect properties, prepare documents, ensure compliance, assess the property with FHA’s 35-Point Checklist, secure permits, and might conduct a feasibility study if needed. They also manage:
- Work Write-Up and Cost Estimate: Creating detailed work write-ups and cost estimates, prioritizing health and safety.
- Review and Inspection: Evaluating fund disbursement requests and ensuring quality and code compliance.
- Monitoring and Communication: Reporting progress and any problems.
- Change Management: Examining suggested changes and preparing necessary orders.
Pros and Cons:
- Pros: Allows purchase and renovation of fixer-uppers with minimal down payment and possibly favorable interest rates.
- Cons: Restrictions on qualifying properties, funding limits, and potentially complex application processes.
- Minimum: $5,000.
- Maximum: Based on FHA Mortgage Limits or specific LTV calculations.
Streamlined FHA 203k:
- Includes: Purchase price plus up to $35,000 for repairs, with a 3.5% down payment.
Qualifying Properties:
- One- to four-family homes completed for over a year, homes with existing foundation, and some condos (not co-ops).
The 203(k) Mortgage Process Consists Of The Following Steps:
A house requiring rehabilitation is identified by the borrower.
The borrower discusses with a lender the possibility of combining the rehabilitation cost with the mortgage.
The lender selects a Consultant from the roster.
The Consultant inspects the home, preparing a work write-up and cost estimate.
The borrower secures a 203(k) mortgage from the lender.
Work begins on the house, with the Consultant monitoring progress and acting as a liaison between the lender and borrower.
Once the work is completed, the borrower moves into the home.
Additional features may include a 20% contingency reserve and provision for temporary accommodation during renovations.
Overall, the FHA 203k loan offers a solution for those looking to purchase and renovate properties, ensuring necessary funds for both processes, but comes with specific requirements and limitations.
