The last couple of posts regarding the FHA 203(k) program have dealt with what are the required improvements and the eligible improvements. Today we are going to review ineligible improvements under the 203(k) program.
While you are putting together repair/rehabilitation estimates it will be good to know the types of improvements you can not include for financing purposes.
Ineligible Improvements for both the traditional and streamline FHA 203(k) program:
- Barbeque pit
- Bathhouse
- Dumbwaiter
- Exterior hot tub, sauna, spa and whirlpool bath
- Outdoor fireplace
- Photo mural
- Instillation of a new swimming pool
- Gazebo
- Television antenna
- Satellite Dish
- Tennis Court
- Tree Surgery
- Additions or alterations to provide for commercial use
Basically, unless you are attempting to include an outdoor 
recreation and entertainment complex you don’t have a lot of restrictions.
It is important to note additional restrictions if you are utilizing the streamline program. If your repair/rehabilitation requests include any of the following items you will need to use the 203(k) traditional program.
- Major rehabilitation/remodeling, such as the relocation of a load-bearing wall
- New construction, including a room addition
- Repair of structural damage
- Repairs requiring detailed drawings or architectural exhibits
- Landscaping or similar site amenity improvements
- Result in work not starting within 30 days after loan closing
I hope this and other posts will be helpful as you prepare to utilize FHA’s 203(k) program.
As always, I welcome comments. What has been your experience with the 203(k) program? Do you have any questions? What observations or opinions do you have toward this financing vehicle?
Tip for real estate agents and contractors: review listed properties needing repair/rehabilitation; develop the estimates for work to be done; partner with a knowledgeable and trusted lender familiar with the FHA 203(k) program; have a turnkey project list to share with prospective buyers
Coming Soon
Contingency Reserves
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Jay Williams
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