203(k) Renovation Mortgages


203(k) Renovation Mortgages

Here's a brilliant solution! FHA 203k loans provide you with an affordable, stable financing solution that combines your current mortgage amount with the costs of your improvements into a single loan and gives you the opportunity to borrow up to 97% of the future value of your home after improvements. This means you could potentially borrow more money than your model 3r home is worth today to create a more valuable home for tomorrow.


By using your home’s after-completion value, you can have a larger renovation budget than with traditional mortgage loans or lines of credit, which are usually capped at 85-90% of your home's current value.


Is there a home you want to buy that needs work?

Then buy the home with an FHA 203k loan and finance the improvements with one combined loan at the time of purchase!!!

The program is available for 1-4 unit properties, PUDs and Condos that are at least one year old. The following is a list of some of the improvements that are allowed:

  • Repair or Replace:
    • –Roofs, gutters, and downspouts
    • –Heating, ventilation and air conditioning systems
    • –Finish Flooring and non structural sub flooring– (does not include structural sub-floor elements such as floor joists)
  • Upgrade or Replace Plumbing and Electrical systems
  • Painting - Interior/Exterior – including lead-based paint stabilization or abatement of lead-based paint hazards
  • Bathroom and Kitchen remodels that do not involve any structural repairs.
  • New Appliances (Range and/or Oven, Range hood, Microwave, Refrigerator, Trash Compactor and Washer/Dryer - built in or Free Standing)
  • Energy Efficient Improvements – may include windows, doors, HVAC systems, furnaces, solar panels – etc.
  • Improvements for accessibility for persons with disabilities – kitchen and bath remodeling to lower counter/cabinet height, installing wheelchair access ramps, widening doorways (non load bearing walls only)
  • Windows and Doors
  • Exterior improvements such as decks, patios, porches and fences
  • Basement finishing and remodeling – including adding walls and bathrooms provided that there are no structural elements involved.
  • Basement Waterproofing
  • Mold Abatement if performed by a licensed Mold Abatement Contractor
  • Treatment of active termite infestation and repairs (tenting, etc)
  • Connection to Public Water or Sewer
  • Repair or replacement of septic tank or well systems

Improvements for this program are limited

They can not include any major rehabilitation or remodeling, new construction such as a room addition, repairs to structural damage, site amenity improvements, landscaping or luxury items (i.e. pools, jacuzzis, TVs, etc.). Also, anything that will displace the borrower for more than 30 days or repairs that require detailed drawings or architectural exhibits are not allowed.

Borrowers are allowed to finance up to an additional $35,000 into their mortgage, including fees and contingency reserve, and there is no minimum amount required. Repairs must begin within 30 days of the loan closing and be finished within 6 months. The borrower receives 50% of the renovation amount when the loan closes and the final 50% is disbursed when all work is complete and the appraiser has inspected the property to ensure that everything has been finished.

Are you a contractor? If so, this is a way to create the money needed to finance your work, money that wasn’t there before!! Think back to all of the jobs you couldn’t do because the homeowner did not have the money to pay for them. Call those clients and tell them about this financing option.

Contractors must be licensed, bonded and carry general liability insurance and must submit documentation to the lender to be approved. Once approved, the contractor cannot be changed without permission from the lender. This protects the contractor and ensures they will be paid directly by the lender when all work is finished. And since the loan is government insured, there is no need to worry about getting paid as long as the contractor complies with the program guidelines.

So don’t put off that project any longer!! Contact a Legend Financial Services loan consultant right now to see if you qualify!!

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