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Money for Improvements for a Fixer-upper

We meet a lot of customers who desire a fixer-upper but don’t have the cash to repair, replace, or improve their dream home.  Most of these customers are aware of an FHA loan, which only covers the price of the home, but what they may not know is the other types of FHA loans.  One of these types of FHA loans allows you to borrow money that you can use towards improvements.

Introducing the FHA 203K!  This loan allows you to borrow up to $35,000 for repairs, replacements, upgrades, remodeling, and enhancing.  Below is a list of eligible and ineligible improvements as well as a bid/proposal requirement checklist:

Streamlined 203K “Eligible” Improvements

Below are the types of improvements that are allowed in the streamlined 203K program.

  • ·         Repair/replacement of roofs, gutters, and downspouts
  • ·         Repair/replacement/upgrades of existing HVAC systems
  • ·         Repair/replacement/upgrades of plumbing and electrical systems
  • ·         Repair/replacement of existing flooring
  • ·         Minor remodeling, such as kitchens and bathrooms, which does not involve                           structural repairs
  • ·         Weatherization: including storm windows and doors, insulation, weather stripping, etc.
  • ·         Purchase and installation of appliances, including freestanding ranges, refrigerators,          washers/dryers, dishwashers, and microwave ovens.
  • ·         Accessibility improvements for persons with disabilities
  • ·         Painting, both exterior and interior
  • ·         Repair/replace/add exterior decks, patios, and porches
  • ·         Basement finishing and remodeling, which does not involve structural repairs
  • ·         Basement waterproofing
  • ·         Window and door replacements and exterior wall re-siding
  • ·         Septic system and/or well repair or replacement
  • ·         Lead-based paint stabilization or abatement of lead-based paint hazards

Steamlined 203K “Ineligible” Improvements

Below are the types of improvements that are not allowed in the Streamlined 203K program.

  • ·         Major rehabilitation or major remodeling such as the relocation of a load-bearing wall.
  • ·         New construction (including room additions)
  • ·         Repair of structure damage
  • ·         Repairs requiring detailed drawings of architectural exhibits
  • ·         Landscaping or similar site amenity improvements
  • ·         Any repair or improvement requiring a work schedule longer than six months
  • ·         Rehabilitation activities that require more than two payments per specialized contractor
  • ·         Required repairs arising from the appraisal that do not appear on the list of eligible repairs
  • ·         Walkways or driveways

Bid/Proposal Requirement Checklist

·         Must reflect date of bid/proposal

·         Must reflect borrowers name

·         Must reflect property address

·         Break out specific costs for materials, labor, permits, etc.  (Lender needs to understand what the reflected items are)

·         No “structural items” reflected

·         Indicate the estimated completion date (must be within 6 months)

·         Licensed Contractor must sign and date

·         Borrower must sign and date

·         Copy of Contractors license, references, and any other state licensing requirements

·         Copy of permit(s) for any work that requires a permit (if you are not sure, ask your contractor)

·         Homeowner/Contractor Agreement to be completed for each bid/proposal and must be signed and dated by the licensed Contractor and the Borrower (copy included in package.)

·         Total sum of bid/proposals and closing costs cannot exceed $35,000


*The only work that can be performed by the borrower is painting or installations of some appliances.  Please check with our office to determine if your project can qualify for SELF-HELP.