This guide covers FHA 203k Rehab Loans Georgia Mortgage Guidelines. The state of Georgia has one of the hottest housing markets in the United States. Besides the great economy in Georgia, many home buyers are migrating to the Great State of Georgia because homebuyers can still find reasonable home prices. Many Floridians are making their move north to Georgia because home values are 30% lower in Georgia versus Florida. Homebuyers can get a lot of house for the money throughout the state of Georgia. Many Georgia home buyers are taking advantage of buying fixer-uppers and foreclosures with FHA 203k Rehab Loans Georgia. In this article, we will discuss and cover the guidelines on FHA 203k loans.
An FHA 203k Loan is often referred to as rehab loans. Rehab Loans enable home buyers to purchase a fixer-upper or foreclosure. Buyers can purchase fixer-uppers with an acquisition PLUS a rehab loan to finance a combination of purchases along with the renovation loan through a single mortgage. Homeowners can also refinance their current mortgage into Rehab Loans through an FHA 203k Loan.
How Does FHA 203k Rehab Loans Georgia Work?
Here is how Rehab Loans through FHA 203k Rehab Loans Georgia works. Borrowers of renovation loans need to qualify for an FHA Loan with regards to credit, debt-to-income ratio, and all FHA Guidelines. Minimum credit requirements to qualify are 580 FICO. The borrower can borrow up to the maximum FHA loan limits for their area. The amount of down payment required on FHA 203k Rehab Loans Georgia is 3.5% of the after-improved value of the home. 203k Loans are only available for owner-occupant primary residence one- to four-unit properties. Second homes and investment homes are not eligible for FHA 203k Rehab Loans Georgia. Homeowners can refinance their current home loan with a FHA 203k Refinance Loan if they need funding for repairs to their home. Streamline FHA 203k Loans have a maximum budget of $35,000. Standard Full FHA 203k Loans have no maximum construction budget.
Benefits Of FHA 203k Renovation Loans
Renovation loans through the FHA 203k loan programs allow home buyers or homeowners to do renovations to their homes without plenty of equity in their homes. Homebuyers can purchase a home that needs major repairs and improvements. They can gut and rehab that home. They can make it a custom home and even do room additions and remodel it the way they want. Most banks and lenders normally do not lend on properties that need repairs and are not habitable. With an FHA 203k loan, homebuyers can purchase any home that is not habitable. Borrowers can get the construction budget and renovate the home to their standards.
Qualification Requirements on FHA 203k Rehab Loans Georgia
As mentioned earlier, to qualify for FHA 203k rehab loans in Georgia, borrowers need to meet all of the FHA Guidelines.
- However, there are property requirements that need to be met as well
- The United States Department of Housing and Urban Development is the parent of the Federal Housing Administration or FHA
- HUD sets all FHA Guidelines
Here are the HUD Guidelines on FHA 203k Rehab Loans Georgia:
- One to four unit properties that need updates and cosmetic repairs
Two types of rehab loans:
- Streamline 203k Rehab Loans
- Standard 203k Rehab Loans
Need scope of work and cost of repairs:
- HUD Consultant required and on a Streamline FHA 203k Loan
- Repair Escrow will be established after closing
- All renovations need to be initiated within 30 days of the closing
- Needs to be completed no later than six months
- With Streamline 203k Loans, 50% of the construction amount is given upfront within 15 days of the closing of the loan
- The balance of the construction amount is given at the completion
FAQs on FHA 203k Rehab Loans Georgia Mortgage Guidelines
What is an FHA 203k Rehab loans Georgia
- An FHA 203(k) loan is a federal mortgage assistance program that finances the acquisition and renovation of a property.
- It is usually used by home buyers or homeowners who need help purchasing or refinancing a property.
- This type of financing is often sought out for houses that require a significant amount of work.
What Types of FHA 203k Rehab Loans Georgia Are Available?
There are two types:
Standard 203(k):
- The money borrowed to purchase a required house and renovation is unlimited.
- However, set FHA lending limits must be followed for the needed repairs.
- These funds can be used for significant remodeling, structural repairs, or renovations.
Limited 203(k) (formerly Streamline 203(k)):
- Works for undocumented, non-critical repairs.
- This is set at $35,000, the limit for fixing a house.
What Are The Eligibility Requirements for FHA 203k Rehab Loans Georgia?
To qualify:
Property Type:
- Must permanently live in the property.
- It can be a multi-family home with up to four units, a single-family house, a HUD-approved condo, or a manufactured home.
Credit Score:
- Most lenders will usually accept a credit score 580, but some will fully rely on a score above 620.
Down Payment:
- This is set at 3.5 % of the loan amount and includes the price set to purchase the dwelling and the renovation cost.
Debt-to-Income (DTI) Ratio:
- DTI cannot go over 46.9% front-end and 56.9% back-end.
What Repairs Can Be Covered with FHA 203k Loans Georgia?
Eligible Repairs:
- New roof installation or related repairs.
- Remodeling of the kitchen and bathrooms.
- Repair or build new structures.
- Upgrading HVAC systems, plumbing, and electrical.
- Improvements to save energy.
- Improvements to increase access for those with disabilities.
Ineligible Repairs:
- Repurposing the property to include luxury features such as swimming pools and hot tubs.
- Repairs do nothing to improve functionality or value or are surface cosmetic changes.
How Does the FHA 203k Rehab Loans Georgia Process Work?
Pre-Approval: Based on your income, credit, and financial history, you are qualified to receive a specific amount for a 203[K] loan.
- Property Appraisal: The approved FHA appraiser determines the property’s value “as-is” and post-repair.
- Hiring a Contractor: Choose a contractor registered to submit a comprehensive estimate of the required repairs.
- Loan Closing: The mortgage proceeds for the purchase and the mortgage proceeds for the renovation are packaged into a single mortgage.
- Renovation Disbursements: Gradual payments for improvements are made as work is completed.
What Are the FHA Loan Limits in Georgia?
The limits change by county in Georgia and depend on home prices:
Single-Family Homes:
- Prices range from $524,225 in low-cost areas to $1,209,750 in high-cost areas.
- For multi-family dwellings, the limits increase by proportion.
What are the costs and fees associated with FHA 203k Rehab Loans Georgia?
- Mortgage Insurance Premiums (MIP):
- Front MIP: 1.75% of the loan amount can be rolled into the loan.
- Annual MIP: Paid Monthly. Ordinarily, 0.55 percent of the loan balance.
- Origination Fees: Added by the lenders who underwrite the loan.
- Contingency Reserve: An additional 10 to 20 percent of the repair cost is set aside for unforeseen expenses.
Can you use an FHA 203(k) loan for investment properties in Georgia?
No. These loans are limited to primary residences only. Multi-family units (up to 4) are permissible when the borrower occupies one of the units.
Are there special considerations for first-time homebuyers?
Yes. First-time home buyers might take advantage of other programs such as:
- Georgia Dream Homeownership Program: This program helps qualified buyers with their down payment.
- FHA 203(K) loans are perfect for first-time homebuyers looking for an inexpensive property to renovate.
How long do renovations have to be completed?
- Renovations must be completed within 6 months of loan closing for Standard and Limited 203(k) loans.
What are the common challenges with FHA 203k Rehab Loans Georgia?
Finding Contractors:
- You must use licensed contractors approved by HUD (FHA).
Extensive Closing Time:
- The closing period for 203(k) loans is longer than other FHA loans because planning for appraisal and repairs takes longer.
Close Supervision:
- The lender oversees the repairs and ensures proper expenditure by the pre-approved budget.
Can a Current Mortgage be Refinanced with an FHA 203k Rehab Loans Georgia?
- Yes. Homeowners can refinance a mortgage under an FHA 203 (k) loan and factor in remodeling expenses.
What is the Process for Applying for an FHA 203K Rehab Loans Georgia?
- Work with an approved lender for FHA loans.
- Assemble necessary paperwork (income verification, credit report, remodel costs, etc.).
- Talk to the lender regarding the mortgage limits and the intended scope of work.
- Speak with the FHA lender located in Georgia or refer to the HUD website for more details.
Advantages of FHA Rehab Loans Georgia
The purpose of FHA 203k Renovation Loans is for homebuyers to purchase fixer-uppers. Buyers can purchase foreclosures or a home that is in the perfect neighborhood but that does not suit the needs of their family. They can benefit from updating the home or making major improvements to it with funding for the rehab. Homeowners can do major room additions with a renovation loan. They can add bedrooms, bathrooms, and do a second-story addition. Homeowners can also do a complete gut rehab and customize it the way that suits their needs. It is like having a brand new, custom-built home. One of the major benefits of doing renovations on a current home is creating instant equity. Most homes are valued with square footage. Dale Elenteny, a senior loan officer at Gustan Cho Associates, says the following about FHA 203k rehab loans and Georgia mortgage guidelines:
By adding on to an existing home and adding square footage, it will increase the value of the home. Home buyers can often get deals when buying a fixer upper or foreclosure where the home is not habitable.
Most lenders will not lend on a home that is not habitable or in need of major repairs. By buying such a home and fixing it up, you can get instant equity. Home Buyers of fixer-uppers or foreclosures who want to make a dream home or homeowners that need to renovate their homes with FHA 203k Rehab Loan, please contact us at Gustan Cho Associates at 800-900-8569 or text for a faster response. Or email us at gcho@gustancho.com. We are available 7 days a week, evenings, weekends, and holidays to take your mortgage inquiry.
