This Article Is About FHA 203k Loan Requirements On Michigan Fixer-Uppers
FHA has a special program call FHA 203k Loans
- FHA 203k loans are an acquisition and construction loan program all in one mortgage loan
- There is one closing for home buyers and homeowners needing to purchase a home or refinancing their current home with a construction loan to do rehab on their property
- With an FHA 203k Loan, a home buyer can purchase a fixer-upper or a foreclosed property that is not habitable and cannot qualify for standard conventional or other mortgage loan programs
- The beauty of an FHA 203k Loan is that you can pretty much do anything to your home
- This holds true whether it is basic kitchen and bathroom remodeling or a complete gut rehab
- Or even a teardown and building a new home on its current foundation
- There are two types of FHA 203k Loans
- The FHA 203k Loan Streamline Rehab Loan and the Standard Full FHA 203k Loan Program
In this article, we will discuss and cover FHA 203k Loan Requirements On Michigan Fixer-Uppers.
FHA 203k Loan Requirements On Streamlines
The FHA 203k Streamline Rehab Loan is limited to a construction budget of $35,000.
- You can do any type of remodeling with the FHA 203k Streamline Rehab Loan
Examples of work that can be done with streamline 203k’s are the following:
- Kitchen remodeling
- Bathroom remodeling
- Basement remodeling
- Attic remodeling
- Other types of work
However, you cannot do any structural changes to your existing home nor can you do any room additions or add new square footage to your existing house:
- FHA 203k Loan Requirements mandate that luxury types of rehabs such as installations of new swimming pools, installing a lake and/or pond, tennis courts, or other types of luxury items cannot be done with 203k Loans
- 203k Loans are limited to improvements of the home and not luxury improvements such as outdoor kitchens or other luxury amenities
These FHA 203k Loan Requirements are both for FHA 203k Streamline Rehab Loans and the Full Standard FHA 203k Loans.
FHA 203k Loan Requirements On Full Standard Rehab Loans
- Due to being home of major automakers, when the Recession hit our country, citizens of Detroit and its surrounding suburbs were the most affected
- Not only Detroit and surrounding areas, but the whole state of Michigan has also felt the drop in real estate values like a sudden earthquake without any warning
- Home values have dropped over 60% in some areas
- Bankruptcies and foreclosure numbers were among the highest in the country
- Countless business owners had to shut down their business after being in business for many generations
- Finally, in mid-2012, the economy and home values started recovering
- There are still many vacant and fixer-uppers in the market
Michigan home buyers can benefit of buying foreclosures, short sales, and fixer-uppers with HUD’s FHA 203k Renovation Loans.
About HUD FHA 203k Renovation Loans
There is no construction budget with the full standard FHA 203k Rehab Loan Program as long as the after improved value appraises after the improvement and the home loan meets the maximum FHA Loan Limit.
For example, here is a case scenario:
- The 2021 maximum FHA Loan Limit is $356,362
- The home buyer is buying a fixer-upper for $100,000
- Needs $150,000 to do a complete gut rehab remodeling project on this subject property
- The home buyer can qualify for a Full Standard FHA 203k Loan for $250,000
- This holds true as long as the after improved value of the home is appraised at $250,000
Since the $250,000 is below the maximum FHA Loan Limit of $356,362 the homeowner is good to go.
Full Standard FHA 203k Loans
With the full standard FHA 203k Loan Program, homeowners can do structural changes to their home:
- They can do second-story additions
- Can add on to existing home
- Can do a complete gut rehab
- Can even do a complete teardown and rebuild on its existing foundation
One of the greatest benefits for FHA 203k Loans is that the home buyer only needs a 3.5% down payment of the after improved value to qualify for both 203k Streamline as well as the full standard 203k Loan.
Minimum FHA 203k Loan Requirements
FHA 203k Loan Requirements fall within FHA mortgage lending guidelines. Borrowers needs at least a 580 credit score, need a 3.5% down payment on the after improved value and must meet all other FHA Mortgage Lending Guidelines. We do not have any mortgage lender overlays. So as long as borrowers meet the minimum FHA Guidelines and get an approve/eligible per Automated Underwriting System, we can get FHA 203k Loan approved, closed, and funded. Please contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Buyers of fixer-uppers can also email us at firstname.lastname@example.org if you are interested in getting an FHA 203k Loan. The team at Gustan Cho Associates are FHA 203k Loan Experts with no lender overlays on government and conventional loans.