203k Rehabilitation Mortgage Insurance

Mortgage and Lending with Primex Mortgage

The Section 203(k) program is a home rehabilitation and repair program, designed to revitalize neighborhoods and spur homeownership.  It is a program that permits homebuyers to finance up to an additional $35,000 into their mortgage to improve or upgrade their home before move-in. With this program, the homebuyers do not have to find separate financing for construction, plus construction begins immediately after loan closing.  It offers a solution that helps both borrowers and lenders, insuring a single, long term, fixed or adjustable rate loan that covers both the acquisition and rehabilitation of a property.  It helps save borrower's time and money and they also protect the lender by allowing them to have the loan insured even before the condition and value of the property may offer adequate security.

Section 203(k) insures mortgages covering the refinancing or purchase and rehabilitation of a home that is at least one year old. Some portion of the loan proceeds is used to pay the seller and in the case of refinancing, the portion is used to pay off the existing mortgage.  The remaining funds are placed in an escrow account and released when the rehabilitation is completed. The cost of the rehabilitation must be at least $5,000, but the total value of the property must still fall within the FHA mortgage limit for the area. The value of the property is determined by either the value of the property before rehabilitation plus the cost of rehabilitation, or 110 percent of the appraised value of the property after rehabilitation, whichever is lower.

The types of improvements those borrowers may make in 203(k) Streamline financing includes:

•1.        Elimination of health and safety hazards

•2.        Structural alterations and reconstruction

•3.        Modernization and improvements to the home's function

•4.        Changes that improve appearance and eliminate obsolescence for aesthetic appeal

•5.        Air conditioning or replacement

•6.        Reconditioning or replacing plumbing; installing a well and/or septic system

•7.        Adding or replacing roofing, gutters, and downspouts

•8.        Adding or replacing floors and/or floor treatments

•9.        Major landscape work and site improvements

•10.     Enhancing accessibility for a disabled person

•11.     Making energy conservation improvements


Germantown loan officer

Montgomery county mortgage rates





Posted by

Comments (3)

John Saari
Worcester, MA
"The Mortgage Buddy"

Nice post Alex. The 203k is such a great program but it doesn't get used enough I think because of laziness. Thanks for the info and good luck.

Mar 09, 2011 11:16 AM
Tere Episale

Good information Alex. I agree with John. I took a few extensive seminars to learn more and when I talk to other agents about it, they are very discouraging. I am certainly ready and willing to assist with what I think is a great program!

Mar 12, 2011 10:36 AM
Alex Echeandia
Primex Mortgage - Rockville, MD

Hi John, thank you. It can really save some deals on all of the short sales and foreclosures.  


Hi Tere, sounds like you are eager to help, thats great to hear!

Mar 14, 2011 09:31 AM