FHA 203K Fixer Upper Home Loan

In addition to determining the value of the home, the appraisal will make sure that the home is in decent condition, and is generally compliant with FHA minimum property standards. However, since the FHA 203k loan includes money for repairs, borrowers may be able to purchase a home that is not compliant, as long as they plan to bring it into compliance during the renovation process. FHA minimum property standards include:

• Decent quality home construction

• Exterior walls must be in good condition

• Access to clean and safe drinking water

• Safe and and public access to the property

• Home must have adequate drainage system

• Availability of water, gas, sewage, and electric utilities

• Electric wiring needs to be safely enclosed

• Any and all crawl spaces must have natural ventilation

• Home should be free of hazards

• Lead-based paints must not be present

• Purchase a home with the improvements paid for.

  Convenient way to finance your home improvements without the need for perfect credit, huge down payments, or high interest rates

• Upgrade your home with your style and needs
• Buy a home that’s usually listed at a lower price due to the older existing condition
• Great interest rates for your rehab in one loan
• Come with a low down payment
• A minimum down payment of 3.5% means you won’t deplete your savings trying to come up with a down payment
• Qualifications may be more lenient than for a conventional loan because FHA
  insures your mortgage.

Any owner occupant primary residence borrower or qualified non-profit group who qualifies for an FHA loan can also qualify for an FHA 203k Loan. No investor purchases using the FHA 203k loan have been allowed since 1996.

Yes, you can refinance your existing mortgage into either version of the FHA 203k loan. The FHA 203k loan is also available for mortgage refinance transactions for those where the property is owned free-and clear. For the FHA 203k Limited Loan, only credit-qualifying “no cash out” refinance transactions with an appraisal are eligible. If the borrower has owned the property for less than a year, the acquisition cost must be used to determine the maximum mortgage amount. The requirement to use the lowest sales price within the last year does not apply to the FHA 203k Limited Loan. 

No. The borrower must be a primary residence owner occupant or a qualified non-profit group. Since 1996, there has been a moratorium on non-owner-occupied investors using the FHA 203k loan (Mortgagee Letter 95-97). See Fix & Flip Loans for Fix and flips.

However, the 203k is eligible to be used on 1-4 family dwellings. So, if a 203k borrower uses a 203k loan to purchase and renovate a multi-family dwelling, the non-owner-occupied unit(s) are permitted to be rented out. So, as long as the borrower will occupy at least 1 of the units of a multi-family dwelling (4-unit max), FHA still considers this borrower an owner-occupant even though the borrower rents out the remaining units.