203k Eligible Repairs

Pic credit to Michelle Meiklejohn

203k loans can do a myriad of repairs and home improvement projects and keep in mind all repairs are done after escrow closes so buying a home in as-is condition with broken windows and other health and safety issues (which normally a lender would not allow) is not a problem with these loans.

The 203k Streamline loan is an abbreviated version of it’s big brother, the 203k Standard loan so let’s start with the 203k Streamline loan.  The 203k Streamline loan is for more cosmetic repairs and remodeling. But cosmetic is a broad term so let’s start with what you can’t do with the 203k Streamline and the $35,000 in repair money that comes with it:

Room additions, moving load bearing walls, pool repair or construction, landscaping, hardscaping, any repair that requires blueprints, and anything structural in nature which would also include drywrot repair, and luxury items.  There are some other exceptions but generally you can do about anything but the above items listed.

So go ahead and get the new appliances, floors, carpet, paint, countertops, lighting, roof, new HVAC unit, gutters, windows and the list goes on and on, and upgrade, remodel and repair that home and know you have up to $35,000 to spend on fixing it up and putting your touches on it.

The 203k Standard loan does everything the 203k Streamline can’t do.  Room additions are allowed, you can downsize from an 6 unit to a 4 unit, increase from a two unit to a four unit (4 units maximum), and even go as far as tearing the property down completely and have funds to rebuilt it. The maximum dollar amount you can borrow for the 203k Standard depends on your state and county FHA maximum loan limits.  The improvements must also make sense for the neighborhood.  You can’t make a 2 bedroom 1 bathroom into a 5 bedroom 4 bathroom if the home is surrounded by other 2 bedroom 1 bathroom homes, it has to make sense.  Also keep in mind that each 203k lender may put additional overlays (rules) on the loan on what you can and can’t do for example some lenders will not allow foundation repairs even though the program allows it.  The lender has the last say.

The 203k Standard as of August 2011 does allow for up $1500 in pool repairs, and some limited hardscape like a driveway but it won’t allow for decorative luxury hardscape but the program does allow for some landscape (lenders may have their own overlays on this) but when you consider everything it can do, these are minor things.  There may be some exciting changes coming on the 203k in the 3rd quarter, so keep an eye out on my blog I’ll let you know what they are.

So if you’re short on funds and looking for renovation financing or can’t get a home equity line of credit, the 203k Streamline or the 203k Standard loan can fix up homes that are being bought in as-is condition or homes that just need some TLC or updating.

Take your pick you now have options and click here to email me your loan scenario, I would be glad to help.