203k Rehab Loans In MN, WI, IA, ND, SD, CO, FL, ND, IA

There is no doubt that their are opportunities in the current real estate market to grab a bargain on a home needing a little tender loving care. Many just have simple cosmetic issues, like ruined carpet, or in need of painting. Others need a new roof, or the previous owner vandalized the house, leaving them with missing cabinets, or missing appliances.

Traditional mortgage loans do not allow you to buy a home not in a livable condition - meaning the day you buy the home, you could not live there. Homes in this condition are very difficult to buy, as mortgage companies generally will not lend on a damaged home.

An important tool for community and neighborhood revitalization in Minnesota, Wisconsin, Iowa, North Dakota, and South Dakota is the FHA 203k loan program. This government program allows you to both buy the home, AND get the money to repair the home all in one easy mortgage loan.

This is where the little known program called the FHA 203K Rehab loan, or Fannie Mae Homestyle rehab loan comes in. The FHA 203K loan is becoming very necessary for the purchase of many properties in need of repair to come back to their full glory. FHA 203K streamlines loans make the process of buying a home that needs a little TLC (or quite a bit in some cases!) easier, more affordable, and quicker.

Made available to certain lenders by the U.S. Department of Housing and Urban Development (HUD), the FHA 203(k) program has provides many home buyers with the funds necessary to buy their first home, or greatly improve a current home. The FHA 203(k) loan is available to borrowers of all income levels, to homeowners who plan to occupy the house, and for homes with one to four units.

The FHA 203k Rehab Loan has:

• Standard FHA credit guidelines
• Standard FHA down payment of just 3.50%
• Flexible credit qualifying (you don't need to be perfect, but bad credit is not acceptable)
• The loan is assumable for future owners
• Finance up to 6 months of mortgage payments while repairs are done, and you have to live somewhere else
• Purchase and improve all in one easy new loan

These two versions of the 203k loans are known as either a Full 203k, or a Streamline 203k. A Full 203k is for repairs OVER $75,000 (as of 2024 - up from $35,000) Streamline 203k on the other hand, is for repairs UNDER $35,000.

Cambria Mortgage offers both full 203k and streamline 203k. Streamline 203k loans work best for the vast majority of home repairs homebuyers. These are offered up to the maximum FHA loan limit in your county.

FHA 203(k) Streamline Loan

The FHA 203K Streamline program allows the homebuyer to put up to $75,000 of rehab work into the new loan. The loan closes JUST ONE time. It is your loan term permanent form of financing. It is NOT a short term construction loan. The Streamline program should not be confused with the more complicated FHA 203K rehab loan, which can accommodate major remodels, major damage repair, storm damage, etc. The FHA 203K Streamline rehab loan is just that - Streamlined.

This loan can help with new paint (in/out), new siding, new roof, new flooring, new appliances, HVAC repair/replacement, electrical & plumbing repair & upgrades, new windows, decks, porches, patios, minor kitchen remodels, & more.

What the streamline loan can't cover is landscaping, structural damage, foundation work, room additions, load bearing wall changes, etc.

There is no HUD consultant or general contractor required on the 203k streamline. However, we do suggest using a general contractor with a strong track record to ensure that your work is done & done right. You can have up to three contractors, but we prefer you use just one.

Rehab Loan Eligible Borrowers:

• Owner Occupants - Purchase - Refinance
• Non- Profits
• Investors NOT allowed
• Investors OK on Fannie Mae Homestyle

Loan Terms Available:

• 30 or 15 year fixed rates
• One year ARMS
• Assumable to a qualified buyer, with no money down

Eligible Properties:

• Single family dwellings
• Condominium
• Townhouse
• 1-4 Unit buildings

Allowed 203k Streamline Repairs:

• Repair/replace roofs, gutters, and downspouts
• Repair/replace/upgrade existing HVAC systems
• Repair/replace/upgrade plumbing and electrical systems
• Repair/replace/upgrade flooring and carpets
• Minor remodeling, such as kitchens and bath (which does NOT involve structural repairs)
• Painting - Both interior and exterior
• Weatherization, including storm windows and doors, insulation, weather stripping
• Accessibility improvements for persons with disabilities
• Lead based paint abatement
• Basement finishing and remodeling (which does not involve structural repairs)
• Septic system replacement / upgrade
• Wells
• Mold abatement / remediation
• NOT Allowed 203k Streamline Repairs
  Major rehabilitation or major remodeling - such as tear down or relocation of walls
• New construction - like room additions
• Repair of structural damage
• Any repairs requiring drawings or architectural exhibits

The full 203k loan covers everything included in the streamline 203k, but allows for repairs over $75,000, and also allows for major remodeling projects.

The full 203k loan does require you work with an FHA 203k Loan Consultant, Homestyle does not. This person helps make sure the scope of work required is correctly bid, and helps you decide what can or cannot be included in the repairs.

Additional Repairs OK under Full 203k include:

• Major rehabilitation or major remodeling - such as tear down or relocation of walls
• New construction - like room additions
• Repair of structural damage
• Any repairs requiring drawings or architectural exhibits

The 203k Loan Appraisal Requirements

The appraiser will be given a copy of your repair bids along with the purchase agreement. The appraiser must say that the after improved value of the home will be at least 110% of the combination of the repair and purchase price.

For example: If the purchase price is $100,000, and your repairs are $25,000, the appraiser must say the house will be worth at least $113,635 when the repairs are done. ($113,635 X 110%) = $125.000

Other Eligible 203k Loan Costs:

• Contingency reserve is automatically built into the loan (10-20% of repair costs)
• Up to 6 months mortgage payments
• Permit costs
• Consultant fees
• Inspection and title update fees