FHA 203(K)….OK….What Improvements Are Required?

I don't know many lender that know much about the 203(k) even in the secondary market.  Every-time I ask a question it goes into the black hole.  So I look forward to your upcoming posts to learn more....

Wells Fargo has a good "renovation loan program" including FHA 203k mortgages. In the Albuquerque Rio Rancho Market (New Mexico) the renovation loans are handled by a specialty office for that purpose.

Anyone dealing with distressed property should have an experienced "ready and willing" lender for 203k mortgages.

Jay's list of "needed repairs" is a bit more superficial than mine.  Possibly, the REO properties I see using renovation financing are a bit more needy.

1. Roof must be leak free and possibly certified.

2. Broken or missing windows, doors, plumbing fixtures and electrical fixtures need to be replaced.

3. Interior and exterior surfaces need to be in "serviceable condition" including carpet, vinyl and other flooring.

4. etc.

I usually ask the lender's appraiser to do a preliminary walk-through with me, and identify needed repairs with "blue tape".  Then we get a contractor to run through with a bid.  The Buyer(s) often have a few items on their "wish list" to add to those required to qualify for FHA financing.  I have done quite a few FHA 203k sales, one was a MFG Home that needed a new well pump and a "permanent foundation" retrofit.  Most common major item has been roof replacement and sheet-rock repair required by roof leakage.

Over the years FHA requirements for property condition have changed quite a bit.  There are definitely differences in interpetation from appraiser to appraiser and probably significant differences from area to area.  Generally the home needs to be complete (nothing missing) and functional (nothing significant broken). 

Matt Peters, REO Specialist in New Mexico http://www.IdealNM.com   

Jay - this is a complicated program - and I highlighted it in NC Week in Review!