What is an FHA 203K Loan?
Basically, it’s an FHA loan to purchase or refinance your home with additional funds for your home improvements. FHA which stands for Federal Housing Administration (FHA) is a mortgage insurance and is part of the Department of Housing and Urban Development (HUD). HUD or FHA do not make direct loans to consumers (homebuyers or homeowners) but FHA does insure loans that are funded by approved FHA lenders. FHA insures different types of home loans which one of them is the 203k that is used to rehab properties. The more popular version though is the FHA 203b which does not include funds for rehabilitation.
Type of work for Streamlined 203(k):
- Roof repair, gutters, downspouts
- Existing HVAC systems
- Plumbing and electrical systems
- Repair, replace or add exterior decks, patios, porches
What does the Contractor you select need to do?
- Provide written work plan and cost estimates
- Must include nature and type of repair and the cost of completion
- Must be licensed and bonded for each specialized repair
- Must agree in writing to complete the work for the amount of the cost estimate and within the allowed time