This is a summary. To read the full 203k Loan document click this link: Rehab a Home with HUD’s 203k

Where can I get the funds to repair my home?

Leaky windows, roof shingles missing, kitchen or bath looking sad and tired? Maybe your house needs to be remodeled for an aging parent that is moving in, or you know that there is no way that it can make it through another winter or summer comfortably.

Unfortunately, you might not have enough in your savings or checking account to cover the cost of improvements or maybe you wish to hold onto that money and go with an option that might help lower your taxes. Look below and learn about a government-backed loan program called a 203(k) along with some standard loan options.

There are ways to get the money you need to improve your living space.

203k Loan program from FHA

The Federal Housing Administration (FHA), which is part of the Department of Housing and Urban Development (HUD), administers various single family mortgage insurance programs. The Section 203(k) program is the Department’s primary program for the rehabilitation and repair of single-family properties. While this program fell out of favor during the housing boom with other loans not requiring inspections, it has gained traction again as one of the few types of loans that can still be gotten for repairs.

How the Program Can Be Used

This program can be used to accomplish rehabilitation and/or improvement of an existing one-to-four unit dwelling in one of three ways: To purchase a dwelling and the land on which the dwelling is located and rehabilitate it. To purchase a dwelling on another site, move it onto a new foundation on the mortgaged property and rehabilitate it. To refinance existing liens secured against the subject property and rehabilitate such a dwelling.

Eligible Improvements (Normal Version)

There are plenty of eligible improvements allowed on 203K loans like: Bathroom remodels, Kitchen remodels with new appliances, Making a house handicap accessible, Whole house renovations & remodeling, Finishing the basement, New deck &/or patio, Flooring Replacement, New doors and windows, Upgrading the HVAC system, Additions, Roofing, Painting, Upgrading the plumbing & / or electrical, Energy efficient improvements, Wells and septic tank repair and upgrades .

Section 203(k) Streamlined Program

The maximum repair amount allowed is $35,000 with no minimum amount that can be taken for repairs. The funds will be escrowed at closing and released as the work is completed. However, the following items are not allowed under this program; complete house remodeling, new construction, structural issues or changes, & landscaping. All work must be able to be completed within three months and must start within 30 days of closing.

So what’s the catch?

The program did fall out of favor during the housing boom due to the fact that inspections are required & minimum standards had to be met. The FHA requires that all doors and windows have adequate weather stripping; cracks, or joints in the building must be sealed to reduce air infiltration; all openings in exterior walls where the cavity has been exposed as a result of the rehabilitation be insulated; ceiling areas must be insulated where necessary; attic and crawl space areas must be adequately ventilated; each sleeping area must be provided with at least one approved smoke detector; HVAC systems if replaced must be sized properly & insulated; work performed must conform with all state & local building codes.

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