The FHA 203(k) loan programs have been around a very long time, over 30 years, but they have only become very popular in the last decade or so. This is most likely because many bank owned properties and foreclosures are in poor condition, do not meet FHA requirements, and require some renovations. Another reason the loan programs may not have been as popular in the past is many lender’s did not handle these type of loans, but that has quickly changed in the past 10 years. More and more lenders are offering rehab loan programs and the process is becoming easier with each loan. Beyond the FHA 203(k), there are similar options available.
FHA 203(k) Renovation Loans
The FHA 203(k) program has 2 different options: Streamline or the Full loan. The streamline loan is an easier loan with less paperwork and approval timeline, but it does have a maximum for repairs capped at $35,000. This loan does not allow for major structural changes. The full loan process can be lengthy, require permits, and will use a 203(k) consultant/inspector. However, this loan option does allow for significant changes and much higher loan amount. I have experience in both types of loans, but so far, the Streamline loan has been significantly more popular.
HomePath Renovation Loans
The Homepath renovation loan is offered by Fannie Mae and very similar to the 203(k) streamline loan. The repairs are typically capped at $35,000 and structural changes are not allowed. This loan is only available for Fannie Mae owned properties.
Other Bank Renovation Loans
Most lenders offer other renovation loan options that may work better with your specific situation. One example is from Wells Fargo. They offer a Purchase and Renovate or Refinance and Renovate loan. It can be similar to a conventional mortgage with the rehab costs added in as part of overall mortgage.
I expect these loan programs will remain popular and good options for home buyers, especially in FL, because there will still be many properties requiring rehab/renovation in the near future. Please contact a lender for more specific information on your loan options.
If you would like more information or a lender referral, please contact me for more details.
Brandon Leske
Hybrid Construction LLC – 203(k) Loan Contractor
bleske@hybridgc.com
www.hybridgc.com