Owning a home is a dream for many, but sometimes the perfect property requires some work. The FHA 203(k) loan allows you to finance the purchase and renovation of a home into a single mortgage.
This renovation mortgage product is called the FHA 203K loan which is a specialty product within the FHA program that allows borrowers to include the cost of repairs and improvements into their mortgage. This can be used to repair, improve, or upgrade your single family or multi-unit home. There are two types of FHA 203K loans: Standard (5K+) and Limited ($1-$35K). The Standard loan requires an FHA 203K Consultant to oversee the project while a lender may or may not require a consultant on a “Limited” loan type (under $35K).
The role of the FHA 203k consultant is to act as a third party inspector to help protect the property owner, bank, and contractor. We will assist with the following items.
- Initial visit to inspect the property and talk with you about both the repairs that will be required to meet HUD’s Minimum Property Standards such as a good roof, working water heater, and safe electrical service.
- Help you compile and prioritize your “wish list” for ‘desired’ renovations you may like to add beyond the required items such as updating a kitchen or bath.
- Provide a feasibility report that you can use to gather contractor bids
- We work with the property owner, contractor, and lender to develop a draw inspection schedule to ensure the work is completed in a timely manner.
- During these ‘draw’ or ‘final’ inspections, we visit the site and verify work has been completed in a professional manner before submitting proof of completion to the property owners and lender so they can disburse funds to the contractor.
- This is not the same as a home inspection. Home inspections that follow the InterNACHI or ASHI standards of practice are much more in-depth than an FHA 203K feasibility study that is geared toward the HUD FHA minimum property standards guidelines. If you are considering purchasing a property and have a tight deadline, a home inspection is often the first step buyers will complete.
