FHA Loans

FHA home loans are mortgage loans that are insured against default by the Federal Housing Administration (FHA).  FHA loans are available for single family and multifamily homes. These home loans allow banks to continuously issue loans without much risk or capital requirements. The FHA doesn't issue loans or set interest rates, it just guarantees against default.

FHA loans allow individuals who may not qualify for a conventional mortgage obtain a loan, especially first time home buyers. These loans offer low minimum down payments, reasonable credit expectations, and flexible income requirements.

FHA 203(B) loans require only a 3.5% down payment.
The maximum loan amount is whatever the County loan limits are.

FHA 203 (K)Loan Amount Limitations

Standard 203(K):

Repairs will include, at the most, 5 Inspection Fee draws (4 intermediate and 1 final) and 5 title updates.

If the utilities are “OFF”, a minimum 15% contingency reserve is required.

Limited 203(K):

The maximum rehab amount is $35,000 and will include 2 Inspection Fee draws, 2 title updates, and a 10% contingency reserve.

The maximum rehab amount on a Standard 203(K) is whatever the County loan limits are.

Types of Repairs that are eligible for a 203(K) loan

Standard 203(K):

Roof replacement that involves re-framing or structural changes, health and safety hazard mitigation, landscaping required to mitigate drainage or erosion issues, aesthetic landscaping when appraiser verifies that the value increases the dollar-for-dollar cost, sidewalk/driveway repair necessary for home access, major repair of termite damage, drywall/insulation replacement, most repairs which require permits, finishing basements. Egress window wells for basements will be admissible.

Site improvements, patios, decks and terraces repairs can be allowed when appraiser verifies that the value increases the dollar-for-dollar cost.

FHA 203(k) does allow major foundation and/or structural repairs and renovation on a Standard 203(K).

Limited 203(K):

Replacement of roof shingles, Cosmetic Repairs such as financing purchase/installation of new appliances; patching holes; replacing doors;painting; lead paint abatement; new counters, cabinets, windows, carpet (subfloor repair requires standard 203(K); repair/installation of HVAC; weatherization; minor repair of termite damage. The property should be inhabitable at the time of loan closing.

Patios and decks repairs can be allowed when appraiser verifies that the value increases the dollar-for-dollar cost.

Note: Structural repairs and additions are not allowed under Limited 203(K) and must be a Standard 203(K) if structural repairs are required.

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