MA FHA 203k Mortgage Requirements

FHA 203k is a financing program sponsored by the department of Housing and Urban Development (HUD) for real estate requiring major work. The program enables home buyers to buy a home with the cost of repairs included. Traditional mortgages mandate that properties be in livable condition. FHA 203k is a resourceful option for short sale or foreclosed properties and affords more home buyers the opportunity to purchase them. The program is a critical tool for expanding home ownership, revitalizing communities, and for making homes safer for those who occupy them. MA FHA 203k mortgage requirements on funds for repairs, allowable renovations, and advice on purchasing MA real estate with FHA 203k can be found below.

Funds For Repairs

The amount of approved repairs is restricted by the type of 203(k) loan and maximum FHA loan amount limits for the area. A minimum amount can also apply. All figures must be documented by quotes from professional contractors. The property must also appraise for the total amount of the home loan, which includes the sale price of the home plus the amount of the repairs, so the buyer is basically rolling in the cost of renovations into the loan. When the property and mortgage closes, the added money may be placed into an escrow account and paid out as work is completed. Renovations should be executed by professional contractors and with necessary permits. With approval, home owners may complete some of the repairs on their own. Inspections may be performed by HUD to confirm compliance. The buyer must plan to use the property as a permanent residence. Multi-family and condos are permitted but with certain restrictions (projects used strictly for investment do not qualify in most cases). Below are more MA FHA 203k mortgage requirements.

FHA 203k Allowable Renovations

Understanding allowable renovations is important. FHA 203k repair funds can be used for a wide range of items. Major items include heating units, cooling units, insulation, roofs, windows, doors, and appliances. Work under some categories have strict guidelines for quality and/or energy conservation. Some cosmetic-type repairs such as painting and flooring can also be permitted. This is only a short reference of the list. The full list may be requested from HUD or from a local FHA 203k approved loan provider. Always obtain a current list as the facts may change.

Purchasing MA Real Estate With FHA 203k

Fully understand the program and options. Obtain a pre-approval in advance of making an offer on a property that would require this type of mortgage. Mortgage companies that offer standard FHA mortgages are not necessarily providers of 203k loans. Interest rates and other factors typically deviate from traditional FHA and conventional mortgages. Speak to a mortgage professional on this program and compare it to other options available.