Program: HUD 203(K) Rehabilitation Loan
Detail Verified 9/3/2020 - Last Updated 9/3/2020
A government sponsored program designed to allow owner-occupants to obtain one loan for the purchase of residential property (1-4 units) in need of rehabilitation, repair, or and/or modernization. Loans include funds for rehabilitation work.
This program is available nationwide.
Who is Eligible for this Program?
Must meet FHA qualifications.
The program provides funds for rehabilitation/repairs to property purchased. You must supply lender with contracts from bids to do the work, and they must also get adequate approval from the lender. The cost of the rehabilitation must be at least $5,000, but the total value of the property must still fall within the FHA mortgage limit for the area.
Is this program for first time buyers only?: No
Property Eligibility Requirements
Eligibility requires that the property must be a one-to-four family dwelling that has been completed for at least one year. The number of units on the site must be acceptable according to the provisions of local zoning requirements. All newly constructed units must be attached to the existing dwelling. Cooperative units are not eligible.
Allowable property types: residential; 1 to 4 units
Benefit: The borrower obtains just one mortgage loan, at a long-term fixed (or adjustable) rate, to finance both the acquisition and the rehabilitation of the property. To provide funds for the rehabilitation, the cost of the rehabilitation must be at least $5,000, but the total value of the property must still fall within the FHA mortgage limit (https://entp.hud.gov/idapp/html/hicostlook.cfm) for the area. The value of the property is determined by either (1) the value of the property before rehabilitation plus the cost of rehabilitation, or (2) 110% of the appraised value of the property after rehabilitation, whichever is less.
Loan Term: 30 years
Homebuyer Counseling / Education Required: No
Owner Occupancy Required: Yes
Other Program Comments: Closing costs may be financed.