About the Section 203(k) Loan Program If you want to buy a home that needs repair or finance needed repairs to your current home, the Section 203(k) loan program by the U.S. Department of Housing and Urban Development (HUD) may be a good option for you. This program allows you to finance the purchase of a house—or refinance your current mortgage—and include the cost of its repairs through a single mortgage.
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. “Section 203(k)” refers to the law, part of the National Housing Act, which allows FHA to make this mortgage insurance available.
The loans are beneficial for low- and moderate-income individuals or families since the loan down payment can be as little as 3 percent. While individuals, local governments, and non-profit organizations may participate as borrowers in the program, the property must be used as a principal residence by an individual or family.
Eligible Home Improvements The Section 203(k) loan covers a range of home improvements. These include, but are not limited to, the following:
• Remodeling bathrooms or a kitchen, including new built-in appliances
• Replacing a roof, gutters, and downspouts
• Adding a family room, bedrooms, or bathrooms • Replacing flooring, tiling, or carpeting ADU
• Completing a basement or attic conversion or adding a second story
• Expanding or building a garage or carport • Renovating a deteriorating property, such as repairing a chimney, termite damage, or structural problems
• Upgrading plumbing, heating, air conditioning, or electrical wiring
• Eliminating health and safety hazards, such as removing lead-based paint
• Making the home accessible to the disabled
• Installing a well or a septic system • Adding a porch, deck, or patio
• Adding or repairing siding or repainting • Installing energy efficient windows or doors
• Repairing an existing swimming pool
Helpful Options If you are not planning to live in the home during construction, you may finance up to six months of mortgage payments during the renovation period. In addition, you may act as your own general contractor or do the actual repair work yourself, if you are qualified. Any money you save this way can be used for cost overruns or additional improvements. You can be reimbursed only for actual material costs, not for your own labor.
Fred Sweezer Sr LLC