Renovation and Construction Loans
Renovation and Construction Loans.
What are renovation and construction loans?
Renovation and Construction Loans
Construction Loan Guidelines:
Purchase or refinance.
For purchases include the cost of the land into the loan.
For refinances, in cases where the borrower already owns the land, we will use the land value as the source down payment.
90 day rate locks provide ample time for the ONE closing date.
12 months of interest only payments while the construction is being completed.
Must use a fully licensed/insured general contractor and fully licensed/insured sub contractors
FHA Rehab Loan Options
What is the 203k program?
HUD’s FHA Section 203(k) loan program fills a unique and important need for homebuyers. When buying a house that needs repair or modernization, homebuyers usually have to follow a complicated and costly process. The interim acquisition and improvement loans often have relatively high interest rates, short repayment terms and a balloon payment. However, Section 203(k) offers a solution that helps both borrowers and lenders, insuring a single, long term, fixed or adjustable rate loan that covers both the acquisition and rehabilitation of a property. Section 203(k) insured loans save borrowers time and money. They also protect the lender by allowing them to have the loan insured even before the condition and value of the property may offer adequate security.
The following repairs can be financed with this program:
· structural alterations and reconstruction (full 203K only)
· modernization and improvements to the home's function
· elimination of health and safety hazards
· changes that improve appearance and eliminate obsolescence
· reconditioning or replacing plumbing; installing a well and/or septic system
· adding or replacing roofing, gutters, and downspouts
· adding or replacing floors and/or floor treatments
· enhancing accessibility for a disabled person
· making energy conservation improvements
· Major remodeling, such as kitchens, bathrooms, etc
· Weatherization: including storm windows and doors, insulation, weather stripping, etc.
· Lead based paint stabilization or abatement of lead based paint hazards.
· Repair, replacement or the addition of exterior decks, patios and porches.
· Basement waterproofing.
· Window and door replacement and exterior siding replacement.
Work with your loan originator at Applied Mortgage to obtain your FHA 203K rehab loan. We will need to collect the contracts from the licensed/insured general contractor with sub contractors who are going to do the work. These must be completed within the initial inspection period. If you are using a Full 203K loan (required for work over $29,000 and/or structural repairs) you will hire a 203K consultant to review the contracts and further inspect the property. All contracts and draw agreements must be finalized with your contractor and the 203K consultant prior to the appraiser inspecting the property. The loan is then processed similar to a regular FHA purchase except the appraisal is done "subject to" all of the repairs being completed. Once the loan closes, you are allowed draws through out the rehab process and you will contact the consultant directly to inspect the property and request the draws. Once the contractor(s) finish the work, a final inspection is completed and only then are all of the final funds disbursed. Contact your loan originator for more information on a 203K Rehab Loan.
DISCLAIMER: All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.
This is for informational purposes only. This is not a pre-qualification, rate lock, or loan commitment.