The FHA 203k Standard loan is used when a home needs structural work, involves non-safety related landscaping, or when the renovation costs exceed $35,000. This loan requires a minimum of $5,000 in repairs. There is no cap on the renovation budget (FHA maximum loan limits apply). You will be required to have a HUD Consultant in addition to a contractor. The HUD Consultant will help ensure that all minimum property standards are met and that your contractor has
completed the work according to contract.
POTENTIAL WISH LIST:
- Add light by increasing the size of the windows
- Finish a basement or attic
- Correct foundational issues
- Knock down walls to open up the floor plan
- Add retaining wall to prevent flooding
- Make repairs to the pool
- Increase the size of the kitchen by expanding into the dining room
- Add square footage by making an addition
- Add a detached garage when one does not exist
Common Questions From Prospective Borrowers
IS THERE A MAXIMUM DOLLAR AMOUNT FOR REPAIRS?
There is no maximum repair amount. However, your loan amount will be determined by several factors, including the FHA County Loan Limit.
IF WE RENOVATED THE FIXER-UPPER WE SAW, REPAIRS COULD TAKE MONTHS, AND WE COULDN’T LIVE IN IT WHILE IT WAS BEING RENOVATED. WOULD I NEED TO START MAKING THE MORTGAGE PAYMENTS RIGHT AWAY?
With the Standard 203k, you can finance up to six months of mortgage payments into your loan, providing that the HUD Consultant (a third-party plan reviewer required on Standard 203k Loans) determines that the home is uninhabitable. This would eliminate the need for you to make two housing payments at once.
WHEN AND HOW DOES MY CONTRACTOR GET PAID FOR THE WORK?
With this loan, no funds are given to the contractor in advance; there is no disbursement at the close of the loan. Draws to the contractor are made as work progresses and phases are completed. Draw inspections will verify that the work has been completed. Up to five draws can be taken.