FHA Rehab/Renovation Loan Program
(Purchase and
Streamline Refinance)

Steps to start a 203k loan

1.        Get a 203k loan pre-approval from your trusted lender.
2.        Hire a Realtor to find an eligible property and negotiate the terms of contract.
3.        Get your offer accepted and open escrow (your Realtor will take care of the
4.        Hire the needed inspection and estimates from reputable, licensed contractors.
5.        Select a contractor and finalize your estimate.
6.        Order an appraisal on your desired property.
7.        Follow the directions of your Realtor and Lender to meet the timelines until you
         have moved into the house and renovations have been completed, this is very

What is a 203k loan?

The 203K loan is a great option when you are making renovations on your existing home
or buying a fixer-upper and wish to use additional funds from the loan to increase your
property value.
Section 203k is a type of FHA home renovation loan that includes the price of the home,  
and extra money to cover the cost of renovations. The costs that are estimated for your
renovation will be held in an escrow account. You will be able to release funds to your
construction team as the renovation is completed.

A 203k loan allows the following benefits:
•        This loan may be used for upgrading or totally renovating  your home.
•        You can combine renovation costs and first mortgage in one loan.
•        Repairs are done after closing escrow on the 203k loan.
•        The loan amount is based on the future appraised value of your home that includes
       the  proposed renovations.
•        Low minimum 3.5% down payment is required for purchases.
•        You may use a 203k loan for improvements on a refinance or purchase.

Standard 203k loan

A standard 203k loan can be used by homeowners or homebuyers who would like to
finance a property that requires major renovations. With the standard 203k loan, you
have the ability to get just one loan for the cost of your mortgage, along with the required
repairs. There are no limitations on the repair funds that you are able to receive, however
there are limits to FHA loans.

  • Repair types allowed:
  • Major rehabilitation and/or structural repair
  • Renovations that require detailed architectural drawings
  • Major landscape work and site improvements *restrictions apply      Elimination of
    safety or health hazards
  • New addition construction
  • Some amenity improvements, consult your lender regarding which ones are allowed.
  • Repair work that will require longer than 3 months or more than 2 payments per
  • specialized contractor.
  • More intensive paperwork is required for a standard 203k loan and you could live in
         the home anytime unless the city places restrictions as part of the permit. Although,
  you will be permitted to add up to 6 months of mortgage payments to the loan

Streamline 203k loan

A streamline 203k loan requires less paperwork than a standard 203k loan. You are still
able to refinance your home or buy a new one, and borrow the money you need for
renovations while having just one monthly payment.  When obtaining a streamline
refinance loan, you will get a list of recommended repairs along with a bid from a
contractor. There will be a timeframe in which all repairs must be completed for your final
appraisal. Homeowners can finance up to $35,000 into their mortgage to repair, improve,
or upgrade their home.

Repair types allowed:
•        Door and/or window replacement
•        Swimming pool repairs
•        Electrical wiring upgrading.
•        Home exterior renovation.
•        Energy efficient improvements.
•        Septic system or a well installation.
•        Replace or repair existing HVAC systems.
•        Replace or repair roofs, including gutters and downspouts.
•        Replace or repair plumbing systems.
•        Update floor and/or flooring treatments
•        Interior and/or exterior painting
•        Update appliances
•        Waterproof basement
•        Home weatherization

A streamline 203k loan allows the borrower to choose between a fixed or adjustable rate
loan, whatever is more convenient for your specific budget.

203k Minimum loan requirements:

•        Credit score: minimum credit score should be 580.
•        Down Payment: Minimum of 3.5% down payment for your 203k loan.

Eligible Types of Properties for a 203k Loan

Single-family residence or  1-4 unit home, such as a townhouse or detached home, it
must have been completed for one year. For 1-4 building condos, you are only able to
make improvements to the interior. Houses and modular units that are able to be moved
to a designated property are eligible. Single units converted into 2 to 4 unit dwellings are
covered with a 203k loan

FHA 203k Loan Additional Notes
Be prepared for a different than regular loan process. The lender will ask for some extra
paperwork to complete the transaction.
All rehabilitation must be completed no more than 6 months after closing. This may mean
keeping a close watch on all hired parties.
Your plan will ultimately decide the size of the loan you need, so the planning must be
done before you get final approval. In addition, renovations must begin within 30 days of
closing, so everything should be set in place beforehand.
You will need help.
This might mean bringing on a 203k consultant, getting plans drawn, and having
contractor bids in hand before getting the keys in hand. Also be aware, all changes must
be up to code and contractors working on the property must be licensed and bonded.

Why 203k Loan?
•        Live in a home that matches your taste and life style.
•        Take advantage of the low down payment on purchases (currently only 3.5% of
purchase price
       is needed)
•        Lower interest on renovations compared to other type of renovation loans.
•        Grow or maintain property value and gain equity.
•        Tax savings could add up. You may be able to write down your property tax portion.
       Please consult your tax advisor.

Call or text me at (909)477-1515 to set a time to talk about your project and start the
journey to your new beautiful renovated home.
Carmen Gutierrez
Real Estate & Mortgage
MLO # 371488 - DRE # 01193488
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