FHA 203k is a home purchase alternative offered by the department of Housing and Urban Development (HUD) for real estate requiring rehab. The program permits home buyers to purchase a home and finance the cost of repairs. Typical loans mandate that properties be in livable condition. FHA 203k is a alternative option for short sale or foreclosed residences and provides more buyers the ability to purchase them. The program is a vital tool for expanding home ownership, revitalizing communities, and for making homes healthier for those who reside in them. MA FHA 203k mortgage information on funds for repairs, eligible repairs, and advice on purchasing MA properties with FHA 203k can be found below.
Funds For Repairs
The total cost of approved renovations is restricted by the type of 203(k) loan and maximum FHA loan limitations for the region. A minimum amount can also apply. All figures must be supported by statements from professional contractors. The home must also appraise for the total amount of the mortgage, which includes the base price of the residence plus the amount of the repairs, so the buyer is basically rolling in the cost of renovations into the mortgage. A buyer can finance up to 96.5% of the purchase price + repairs or 96.5% of 110% of the after improved value (whichever is less). When the property and mortgage closes, the repair funds may be placed into an escrow account and released as repairs are made. Repairs should be performed by professional contractors and with applicable permits. With approval, home owners may complete some of the items on their own. Inspections may be held by HUD to ensure compliance. The home buyer must plan to occupy the property as a permanent residence. Multi-family and condos are permitted but with certain restrictions (projects used strictly for investment do not qualify in most cases). Below are more MA FHA 203k mortgage information.
FHA 203k Eligible Repairs
Understanding eligible repairs is important. FHA 203k loans can be used for a wide range of items. Major repairs include heating systems, cooling systems, insulation, roofs, windows, doors, and appliances. Work under some categories have strict guidelines for quality and/or energy conservation. Some cosmetic-type repairs such as painting and flooring can also be allowed. This is only a subset of the list. The full list may be retrieved from HUD or from a local FHA 203k approved lender. Always obtain a current list as the restrictions may change.
Purchasing MA Properties With FHA 203k
Fully understand the program and options. Obtain a pre-approval prior to making an offer on a property that would need this type of mortgage. Banks that offer general FHA products are not necessarily approved to offer 203k loans. Interest rates and other factors typically vary from traditional FHA and conventional options. Speak to a mortgage professional on this program and compare it to other alternatives available.
MA FHA 203k Mortgage Information Disclaimer
The above MA FHA 203k mortgage information relating to funds for repairs, eligible repairs, and purchasing MA properties with FHA 203k is provided by Christopher Graves at Emery Federal Credit Union and is meant to be a basic overview of this program. It does not discuss every restriction or option and is subject to change without notice. Refer to the HUD Website for comprehensive details or contact Christopher at 781-759-1200 x22 or christopher.d.graves@gmail.com.