Home
Making Money
Indianapolis HUDS
What is a HUD Home?
Who Can Buy HUD Homes?
Listing Process Begins
Sales Requirements
Listing Time Lines
Listing Codes
House Market Value
Condition Report
Example Listing
What To Offer?
Calculate An Offer
Teachers
Policeman
FHA Home Loan
FHA 203K Loan
Streamlined 203K Loan
FHA Requirements and Guidelines
HUD Home for a $1.00
HUD Homes Search
VA Homes for Sale
VA Vendee Financing
VA Home Loans
VA Foreclosures Search

FHA 203K Mortgage Financing for Rehab of HUD Homes

FHA 203K mortgage financing for the rehab of HUD homes is for owner-occupant buyers using insured FHA loans. There are conventional mortgage rehab programs available for the non-FHA buyer.

If you are considering making a bid on a HUD home you need to check to see if it is FHA 203K Mortgage eligible. It will be included with the HUD listing information. The information on the listing will state: FHA Financing: Uninsured (UI) 203K Eligible: Yes

One of the qualifications for the 203K rehab loan is the needed rehab costs has to exceed $5,000.

Eligible Improvements for HUD 203K

There are many advantages of using 203K rehab loan to finance your purchase of a HUD home.

1. One FHA rehab loan can finance the purchase of a HUD home including the costs of repairs and construction. The 203K rehab loan is actually three loans in one: purchase loan, permanent financing loan, and construction loan.

2. Because it is a FHA insured loan it is easier to qualify for and the down payment is only 3%.

3. Borrower can do some to their own home improvements thus saving money.

4. 203K rehab loan can be use for multi-family, up to four units.

5. Borrower can finance up to six months mortgage payments into the 203K rehab loan. This is great if you have to pay a loan payment or rent while of renovated the HUD home.

6. Also, a special program for disabled home buyer where the total costs for retrofitting the home to meet the needs of disabled persons can be financed in the 203K rehab loan.

The FHA 203K mortgage is a lot more time consuming than a 203B loan. It usually will take up to sixty days to close.

Steps to the FHA 203K Mortgage Process:

1. Identify the HUD home you want to make a bid for. Make sure the property is eligible. Have your real estate agent do a market analysis of the property.

2. Locate FHA approved rehab lender and get pre-approved for a 203K rehab loan.

3. Submit bid for the HUD home.

4. Buyer and FHA rehab lender arranges for a detailed proposal showing the scope of word to de done, including a detailed cost estimate on each repair or improvement of the project.

5. Appraisal is done to determine the value of the HUD home after renovation.

6. The loan for the purchase and rehab costs is approved by the rehab lender. The FHA rehab loan closes for an amount that will cover the purchase cost of the HUD home, the remodeling costs and the allowable closing costs. The amount of the loan will include a contingency reserve of 10% to 20% of the remodeling costs for unexpected costs.

7. At closing, HUD is paid off for the purchase price of the property and the remaining funds are put in an escrow account to pay for the repairs and improvements during the rehabilitation period.

8. The mortgage payments begin the day you close.

9. The escrowed funds are released to the contractor during construction for work completed. To ensure completion of the job, 10 % of each draw is held back. This money is paid after the lender determines their will be no liens on the property.

10. If there are funds left in escrow after all renovations have been completed, the remaining funds we be used to reduced the principal of the FHA 203K mortgage.

Eligible Property for Rehab Financing

Although 203K rehab loan is a great source of rehab financing it takes a rehab lender that has a lot experience in this type of financing.


Back to Home Page from FHA 203K Mortgage




footer for FHA 203K mortgage page