Renovation

Whether you're buying a home that needs to be completely renovated or simply updating certain areas, the FHA 203k loan allows you to combine your renovation costs into your mortgage so there is one loan with one closing. The amount borrowed is a combination of the cost of the home and the estimated price of the repairs, including the labor expenses. This type of loan is backed by the Federal Housing Administration, but you don't need to have an FHA home loan to qualify for a FHA 203k refinance loan.

Here are some types of projects eligible for an FHA 203k Loan:

• Removal of lead-based paint
• Decks, patios, porches
• HVAC systems (heating and air conditioning)
• Basement completion
• Basement waterproofing
• Updates to a septic or well system
• New kitchen appliances
• Washer and dryer upgrades
• Roofs, gutters, and downspouts
• Plumbing and electrical upgrades
• Minor kitchen or bathroom remodeling
• Installing carpet, tile, or wood flooring
• Restoring windows or doors
• Weather stripping and insulation upgrades
• Disability improvements
• Energy efficient upgrades
• New siding
• Building a home addition

Types of properties that qualify:

• A one-to-four family home that has been complete for at least a year
• A home that has been torn down as long as some of the existing foundation still remains
• A home that may need to be moved to a new location
• Some condos

Your home improvement project will need to be completed within six months, and the funds will be put in an escrow account to be paid out to the contractors upon completion. The improvements or upgrades will also need to be performed by professionally licensed contractors.

On top of being FHA-approved, applicants for an FHA 203k loan will need to meet minimum credit score and employment history requirements. Bankruptcies have a two-year seasoning requirement from discharge and foreclosures require 3 years of seasoning. Generally, a two year history of income documentation is required to meet FHA requirements.