Financing your ADU

By
Home Inspector with Hud Certified 203K Consultant nachi10010504

Two common loans to consider in financing your ADU. Cash-out refinance loans usually allows up to 80% of your equity. Funds are released directly to you to build your ADU. When equity is insufficient, renovation loans offer a larger construction budget as the loan amount is based on the future value of the property once construction is completed. 

The Section 203(k) loan program is HUD’s primary program for the rehabilitation and repair of single family properties. Section 203(k) loans are provided through HUD-approved mortgage lenders nationwide and insured by the Federal Housing Administration (FHA), which is part of HUD


Eligible Activities:
Accessory dwellings Unit (ADU)
Converting Garages to livable spaces
The extent of the rehabilitation covered by Section 203(k) insurance may range from relatively minor (though exceeding $5000 in cost) to virtual reconstruction: a home that has been demolished or will be razed as part of rehabilitation is eligible, for example, provided that the existing foundation system remains in place. Section 203(k) insured loans can finance the rehabilitation of the residential portion of a property that also has non-residential uses; they can also cover the conversion of a property of any size to a one- to four- unit structure. The types of improvements that borrowers may make using Section 203(k) financing include: 

https://youtu.be/G3u5KH-pnvg 

structural alterations and reconstruction 
modernization and improvements to the home's function
elimination of health and safety hazards
changes that improve appearance and eliminate obsolescence
reconditioning or replacing plumbing; installing a well and/or septic system
adding or replacing roofing, gutters, and downspouts
adding or replacing floors and/or floor treatments
major landscape work and site improvements
enhancing accessibility for a disabled person
making energy conservation improvements
HUD requires that properties financed under this program meet certain basic energy efficiency and structural standards.

 

 

Fred Sweezer Sr

1-562-234-2689

https://california203kconsultant.com/

 

Comments (0)