Frequently Asked Questions

Frequently Asked Questions

Can you replace large items like well/septic or AC Systems?

Yes, you can replace most large projects such as well/septic and HVAC systems. There are some limitations on septic and well repairs on properties smaller than one acre. HUD can also require hookup to public utilities if they are accessible. Contact us to discuss the specifics on your project.

Can I use gift funds or down payment assistance on the FHA 203k loan?

Unfortunately you can’t use Bond monies with FHA 203k. Some down payment assistance and Gift/Borrowed funds is allowed.

Do ‘For Sale by Owner’, ‘Bank REO’, or ‘Short sales’ quality for FHA 203k loans?

Yes, you can use an FHA 203k loan on just about any property for primary residential use. Conventional products allow for other occupancy types, such as rental/investment property and second homes.

Is there a limit on the amount or type of construction?

There are different home renovation loan solutions for every project. From simple cosmetic changes to structural rehabilitation, talk to us about the loan solution that will work for you!

What does the time frame look like for closing and the renovation process?

Typically the process is about 45 days from contract to closing. Speed up the process by having your contractor selected and your credit documentation ready.

Can we put on an addition with these loans?

Yes. You can move a house, demolish and rebuild, add square footage, complete construction, and repair structural damage with these loan programs.

What are contingency reserves?

Contingency reserves are funds set aside by the lender to make sure you have sufficient funds if unforeseen repairs come up. This is usually about 10%-20% of the repair budget. If the reserves aren’t used, they’ll go back into the principal balance of your loan.

What is a 203k plan review?

A conversation with your consultant to determine whether your project is reasonable. You’ll discuss obstacles and challenges that might appear before beginning the 203k loan process.

How many appraisals are required?

Only one appraisal is required, unless an underwriter calls for a second appraisal due to a property flip in the last 90 days. Ask us about loan options that can help with HUD’s new ‘flip policies’.

Can we use the “$100 dollar down” program on HUD properties with 203k?

Yes. HUD has a special program that allows you to use an FHA loan and apply to have your down payment reduced from 3.5% to $100. This is allowed with FHA 203k loans.

Can I use my own contractor?

Yes. With certain restrictions, you’ll be able to use a licensed and insured contractor of your choice. This precludes blood relatives.

Is there a loan type that can help finance renovation on Investor properties?

HomePath and Homestyle loans can help you renovate investor properties with loans for the purchase price and the construction costs for investors.

Are there any special inspections required on FHA 203k loans?

There are no upfront inspections required by HUD for a FHA 203k loan. A Standard 203k loan will require a write-up form the Consultant for the closing. However, I do recommend getting a HUD consultant out to the property for a preliminary inspection. It’ll cost you $150 – $400 and give you a list of repairs with estimated costs.This can be helpful if you don’t have a contractor lined up or want to do minimal repairs to pass FHA property requirements.

Is this loan restricted to single family properties?

No. You can use this product on Modular, Mobile, 1-4 unit multi family, Mixed use space, and can even convert property from one use to another.

Can I do my own work?

Yes, if you are a licensed contractor. Self-help is a product that can be used in special case-by-case circumstances. You’ll need to work with your loan officer to determine if your project will be eligible.

What is a 203k Consultation?

The services you’ll receive from a certified HUD consultant. This will include a Minimal Property Standards Evaluation at the beginning of the process and all subsequent write-ups for your renovations.