Limited 203k loans are for light weight repairs with no structural repairs. Many of the “Limited 203k lenders ONLY” look at a termite report as disqualifying it for a Limited 203k loan. There is no special qualification for an FHA lender to add “Limited 203k” loans to their offering. There is a plethora of this type lender but now and again, it can bite you and them as late in the game it is discovered there is a structural issue that makes it a “full or standard 203k loan”.
If the appraiser goes through the home and finds so much as one item that should have been caught the guideline says it MUST become a full 203k and no longer qualifies as a streamlined k loan. If your lender only does the streamlined k they then loose the loan after they have put work into it. This has prompted most of them to use 203k consultants for their home inspection and bid request to insure it stays a limited 203k if it ever was one.
If this happens to you this could cause a delay as a new lender takes over the file and has to start from the beginning and the process starts over. It is clearly better to know up front so this is not ever YOUR surprise.
Full 203k loans are available for more extensive repairs that may include structural repairs, but may be simple repairs as well but with much higher dollar amounts up to the county loan limit less the cost of acquisition or in the case of a refinance, less the cost of the existing debt. We did one FHA 203k project where the construction cost was $544,000, an extensive renovation with room addition.
If someone says the construction limit is $35,000 be wary, it isn't.
If you are replacing a septic system it is considered a standard 203k and not a Limited.
Downtown
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