FHA Breaking News: HUD’s 203(k) Rehab Program Gains Popularity

By
Services for Real Estate Pros with SendOutCards

HUD's 203(k) Rehabilitation Program Effectively Restores Communities and Increases Homeownership Opportunities

Rehabilitating a home through HUD's 203(k) Rehab Program involves various single family mortgage insurance programs administered by the FHA. According to HUD, the mortgage loans are obtained through FHA-approved lenders, which submit applications to conduct credit approval of the buyer and have the property appraised. The lenders fund the mortgage loans that are then insured by HUD.

Importantly, the 203(K) Rehab Program is HUD's most effective and used program for the rehabilitation and repair of single family homes. Thus, it is an invaluable resource for community and neighborhoods that wish to restore and renew the homes in their area, and as a result, also expand opportunities for homeownership. Restoration and revitalization of communities is HUD's primary goal, and the 203(k) Rehab Program is intended to maintain importance and support amongst HUD and its participating lenders.

Eligible properties include one-to-four family dwellings that have existed for more than a year, and newly constructed units must be attached to the existing home. Homes that have been demolished, or that will be destroyed as a result of rehabilitation, are also eligible as long as some of the existing foundation system remains. The program can also be used to convert a one-family home into a two, three, or four-family dwelling, and along the same lines an existing multi-family unit can be decreased.

The program has seen success, as many lenders have used it in partnership with state and local housing agencies, as well as nonprofits, to renew communities and restore homes. Interestingly, much of 203(k)'s success is because lenders have utilized other resources in tandem with the program, such as combining it with financial programs such as HUD's HOME, HOPE, and Community Development Block Grant Programs. When lenders combine the rehab program with further financially supporting efforts, the result is not only increased assistance for borrowers, but also a clear demonstration by lenders of their commitment and desire to help lower income communities. Furthermore, when lenders are working to meet the standards and responsibilities set by the Community Reinvestment Act (CRA), their work contributes to HUD's commitment to increasing homeownership possibilities for the less privileged.

For more information about the FHA 203(k) and CE Classes contact Diego Hodge at 770.753.6239 or email at Diego.Hodge@renovationmp.com.

Renovation Mortgage Plus is America's FHA 203(k) Authority * GRML 21936

Comments (8)

Maria Villenas
Bayou City Realty Advisors - Houston, TX
Buy*Sell*Lease*Build*Invest*Wholesale

When you use an FHA 203K do you get two loans or one? 

Does the property need to be rehabbed by closing? 

Is the loan based on current appraised value or sales price?

Is this Rehab loan also for first time home buyers?

Does the applicant need to have a certain credit score?

Thanks for your informative blog, I hope you get a chance to respond to my questions.

God Bless You!  Have a Great Day!

Maria

www.bayoucitylupita.com  

 

Jan 07, 2008 01:48 AM
Diego Hodge
SendOutCards - Lawrenceville, GA

Maria:

I hope this information helps:

When you use an FHA 203K do you get two loans or one?  It' a 1st Mortgage Only.

Does the property need to be rehabbed by closing?  No. The after-improved value appraisal is supported by the work scope and contractors bid. Renovation does not begin until after closing.

Is the loan based on current appraised value or sales price? The loan is based on sales price and renovation amount which will equal the total loan amount.  The maximum LTV is based on the after-improved value and not the as-is value.

Is this Rehab loan also for first time home buyers? Yes

Does the applicant need to have a certain credit score? FHA is not based on credit score however it does take in account credit history.

Thanks for your questions. 

I hope your day is as exciting as mine!

-DH

Jan 07, 2008 01:58 AM
Kate Bourland
Marketing with Kate - Redding, CA
Onlilne Marketing Mobile Marketing
Diego, I was looking for more information on the FHA Rehab and you very kindly provided it.  What is the after-improved maximum LTV?  Is it still 97% or are the limits lower?
Jan 30, 2008 09:55 PM
Anonymous
DIego Hodge
The after-improved value is 110%.  FHA allows this because some repairs and improvements do not add market value such as electrical and plumbing repairs and upgrades.
Jan 30, 2008 10:34 PM
#4
Kate Bourland
Marketing with Kate - Redding, CA
Onlilne Marketing Mobile Marketing
Thank you Diego,  I had read that it was 105% but I didn't understand why.  I appreciate the information!
Jan 30, 2008 10:47 PM
Anonymous
Fha Guru http://www.onlinefhaservices.com
Thanks for the clarification
Feb 03, 2008 07:14 AM
#6
Anonymous
melvin gipson

Can anybody help with this question, there rumors that hud's 203K rehabit loan are not honored by lending institution because of the housing crisis. Is this true or false?

Jul 22, 2008 01:13 PM
#7
Diego Hodge
SendOutCards - Lawrenceville, GA

It is true some lenders have stopped using the program however there are still quite a few that continue to underwrite them.  Simply put, the program is still being used in the market.  You probably have to locate a specialist or go to the HUD website.

Jul 22, 2008 02:26 PM