FHA 203(K) Fixed Rate Renovation Mortgage

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Standard (k) vs. Streamline (k)

Purpose:  Purchase & Refinance

Eligible Borrowers:  Owner Occupied

Property Types:  1-4 Unit Residential, Mixed-use, condominium, Manufactured housing

Seller Contributions:  6% or standard FHA Guidelines apply to 203(k)

MI Premiums:  The same UFMIP (1.75%) & monthly (.55%) required on other FHA mortgages. 

Max. Mortgage Amt.:  FHA statutory loan limits for the subject property location.

Allowable Renovation Costs: 

A minimum of $5,000 in repair cost is required.  No maximum renovation cost.  The total mortgage must be within the FHA statutory loan limits.

The borrower may elect to finance certain costs associated with the renovation.  The renovation costs, whether financed or paid in cash, include the following:

• Actual cost of the repairs based on plans and specifications or work write-up as detailed by the consultant
• Contingency Reserve equal to 10% (can be up to 20% based on the scope of the project).  If utilities are not turned on at time of the inspections, a 15% contingency reserve is required.
• Allowable construction related fees and costs:  Inspection/Title Update Fees, Architectural/Engineering Fees, Independent Consultant Fees, Permits and Other fees, Supplemental Origination Fee, & Discount Pts on repair costs.
• Escrowed mortgage payments for up to six months during the renovation period while the property is not occupied

Consultant:  REQUIRED:  The consultant must be listed "in good standing" on the FHA 203(k) Consultant Roster.  ML 00-25 states that lender has the sole responsibility for selection of the consultant from the roster and will be held accountable, along with the consultant, for deficient work write-ups, cost estimates and progress payments.