Renovation Loans

FHA 203k Rehab Loan for you next MN, WI, or SD home?   

This loan allows you to buy a home needing a little TLC, and get the money to repair it all in one loan.

Thousands of people are using the FHA 203k Streamline loan every single month. Let us help you purchase a MN, WI, or SD home with just 3.50% down, AND provide you with the money to fix the house, bring it up to code, get it painted, replace carpet, fix the roof, or even add new appliances.

There is no doubt that the current real estate market offers a lot of great bargains on bank owned, Foreclosed, REO (bank owned), and short-sale homes. However, many of these homes are in poor condition. Missing appliances, ruined carpet & flooring, holes in the wall, etc. Typical mortgage loan programs DO NOT finance home in poor condition, or that are not currently habitable.

Therefore an important tool for community and neighborhood revitalization is the FHA 203(k) loan.

• FHA standard guidelines
• Standard 3.50% FHA down payment
• Flexible, and easier credit qualifying - credit scores as low as 640.
• Assumable loans
• Finance up to 6 months of mortgage payments
• Purchase and Improve all in one loan

The FHA 203(k) loan is available to borrowers of all income levels, to homeowners who plan to occupy the house, and for homes with one to four units.

There are two types of FHA 203(k) loans to understand, 203k streamline, and a full 203k:

Streamline 203k. The 203k Streamline loan is for repairs UNDER $35,000, and is the most popular 203k rehab loan. It works for the vast majority of home repairs.

Full 203k: For repairs over $35,000 in cost.  Allows for major items like room structural damage, foundation work, room additions, load bearing wall changes, etc. Few lenders offer this program due to it's risk and complexity.

The FHA 203K Rehab loan is becoming very necessary for the purchase of many Bank Owned, foreclosure, and short-sale properties.

The loan closes just one time, and is a permanent form of financing. This rehab loan can help with new paint (in/out), new siding, new roof, new flooring, new appliances, HVAC repair/replacement, electrical & plumbing repair & upgrades, new windows, decks, porches, patios, minor kitchen remodels, & more.

There is no HUD consultant or general contractor required on the 203k streamline. However, we do suggest using a general contractor with a strong track record to ensure that your work is done & done right.

NOTE: You are NOT allowed to do ANY of the repair work yourself under this program.
All work must be done be a licensed contractor.

Please give us a call to find out if this loan is right for your next purchase in need of TLC & repairs.

203K Eligible Borrowers:

• Owner Occupants - Purchase - Refinance
• Non- Profits
• Investors NOT allowed

Types of 203K Loans:

• 30 or 15 year fixed rates
• One year ARMS
• Assumable to a qualified buyer, with no money down

203k Eligible Properties:

• Single family dwellings
• Condominium
• Townhouse
• Modular
• 1-4 Unit buildings - you can increase or decrease the number of units with this loan.

203k Interest Rates:

FHA 203k interest rates are slightly higher than a normal FHA loan. This is due to the increased risk the lender have if the projects doesn't get done, has cost over runs, or if the house now has a bigger loan than what the property is worth.

Common Allowed Repairs on 203k Streamline Loans:

• Repair/replace roofs, gutters, and downspouts
• Repair/replace/upgrade existing HVAC systems
• Repair/replace/upgrade plumbing and electrical systems
• Repair/replace/upgrade flooring and carpets
• Minor remodeling, such as kitchens and bath
• Painting - Both interior and exterior
• Weatherization, including storm windows and doors, insulation, weather stripping
• Accessibility improvements for persons with disabilities
• Lead based paint abatement
• Basement finishing and remodeling (which does not involve structural repairs)
• Septic system replacement / upgrade
• Wells
• Mold abatement / remediation

Additional Repairs Allowed on Full 203k loans

• Major rehabilitation or major remodeling - such as tear down or relocation of walls
• New construction - like room additions
• Repair of structural damage
• Any repairs requiring drawings or architectural exhibits

Unacceptable 203k Repairs (items NOT allowed):

• Landscaping or irrigation systems
• Any repair that would take longer than 6 months
• Luxury items are not eligible (like hot tubs, swimming pools, patios, decks)

FHA 203k Appraisal

The appraiser will be given a copy of your repair bids along with the purchase agreement.  The appraiser must say that the after improved value of the home will equal at least the combination of the repair and purchase price. For example, if the purchase price is $100,000, and your repairs are $25,000.  The appraiser must say the house will be worth within 110% of $125,000 when the repairs are done.

Other Eligible 203k Costs:

• Contingency reserve (10-15%)
• Up to 6 months PITI mortgage payments
• Permit costs
• Consultant fees
• Inspection and title update fees
• Architectural & Engineering fees (if needed)

FHA 203k rehab loans are more complicated, yet there is nothing to fear. Here are a few suggestions to get you started:

1. First get pre-approved for a basic FHA loan
2. Start looking at homes.
3. If you find one in need of repair, Call our 203k Loan Experts to discuss the property at (651) 552-3681   
4. Obtain bids for the required repair work
5. Decide if it makes sense to buy this fixer-upper