FHA Announces Updates to its 203(k) Rehabilitation Mortgage Program

The Federal Housing Administration (FHA) has announced updates and improvements to it’s 203(k) rehab mortgage which are intended to reduce barriers to using the program.

The FHA 203(k) rehab loan allows people to both buy a home AND get the money to repair it all in one loan.

Enhancing the 203(k) Rehabilitation Mortgage Insurance Program (203(k) program) is an integral part of FHA’s goals to increase the supply of affordable housing, expand affordable financing options for homes in need of repair, and stabilize neighborhoods by reducing the blight of vacant and abandoned properties.

FHA has now enhanced its 203(k) program guidelines to:

• Increase the Limited 203(k) total rehabilitation cost from a maximum of $35,000 to a maximum of $75,000;
  
• introduce an annual review process for updating the maximum total rehabilitation cost for Limited 203(k);
• Extend the rehabilitation period to 12 months for the Standard 203(k) and nine months for the Limited 203(k);
• Increase the number of days that a borrower is unable to occupy the subject property during the rehabilitation period for Limited 203(k) from 15 to 30 days;
• Permit mortgagees to increase the number of months of financeable Mortgage Payment Reserves for the Standard 203(k);
• Allow financing of 203(k) Consultant fees for Limited 203(k)
• Revise the 203(k) Consultant fee schedule.

FHA believes these latest revisions will make the program offerings more attractive to lenders, 203(k) Consultants, real estate agents, home buyers, and homeowners as a tool for revitalizing homes and neighborhoods, thereby providing greater access to, and increased production of, affordable housing.

In recent years home buyers obtained fewer 203(k) rehab program renovation mortgages despite the growing market need, likely because of a simple lack of education about the program.

Cambria Mortgage, the Joe Metzler Team has plenty of experience with rehab loans, and has a special web page dedicated to the program where you can lean more HERE.

FHA Doesn’t Do Loans

While the program is from FHA, it is important to understand that FHA writes the rules for the renovation program, but does not actually provide the loans to the public. Homebuyers seeking these loans must apply through an FHA authorized lender like Cambria Mortgage.

HUD, The VA, and the USDA requires those who offer their mortgage loans go through a stringent approval process. We are an approved FHA, VA, and USDA mortgage lender. We are not acting on behalf of, or under the direction of the VA or the Federal Government. HUD / FHA and the VA do not lend directly to the public, only through approved lending institutions like us here at Cambria Mortgage.