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203K IMPROVEMENTS THAT ARE ALLOWED  – Fha 203k

203K IMPROVEMENTS THAT ARE ALLOWED  – fha 203k  home improvement loan

s mentioned above, the Limited 203k and Standard 203k programs cover two general project scopes. The Limited 203k is meant for smaller repairs and improvements. The Standard 203k is meant for structural improvements including complete home reconstruction from a demolished or razed building (provided the complete and original foundation system remains). If the home is torn down all the way to the footings, you can’t use a Standard 203k home improvement loan  but instead could be qualified for an FHA 203(b) which is meant for new construction.

Standard 203k Projects

Here are some examples of larger projects allowed under the Standard 203k program:

Room additions

Major energy conservation improvements

Floor treatments

Free-standing appliances

Add heating/cooling systems

Plumbing

Roofing

Septic

Moving a house

Add a storm shelter

Structural Work

Wells

Repairs over $35,000

There are a couple additional Standard 203k requirements to know about.

First, properties must meet certain energy efficiency and structural standards and comply with home improvement loan building codes. All FHA minimum property standards must be met. Improvements must include weather stripping, insulation and other thermal efficient measures. Adequate safety measures must be met such as working smoke detectors and fixing peeling paint.

Second, for Standard 203k loans, an FHA-approved 203k Consultant will oversee and inspect the rehab efforts from start to finish. Here are some things you’ll want to know about Consultants, they are:

Selected by the lender

Enter into written agreement with the borrower which outlines fees ($400 to $1000) and duties

Prepare cost estimates for the improvements and/or repairs

Reviews plots if there are additions, floor plans, cabinetry, elevation, grading and drainage plans

Inspect home at each at each work milestone so that draws from the escrow account may be released

Complete a final inspection of the home

Limited 203k Projects

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Here are some examples of smaller, more “cosmetic” projects that can be financed with a Limited 203k:

  1. Replace cabinets
  2. Interior or exterior painting
  3. Improve accessibility for people with disabilities
  4. Add major appliances (dishwashers, free-standing ranges, refrigerators, etc.)
  5. Repair or replace existing flooring and carpeting
  6. Lead-based paint abatement
  7. Minor remodeling (non-structural)
  8. Repair or replace existing HVAC systems, heating, plumbing and electrical systems
  9. Repair roof, gutters and downspouts
  10. Repair decks, patios or porches
  11. Repair septic systems
  12. Weatherization

Major rehabilitation, like relocating a load-bearing wall, is not allowed with a Limited 203k. Nor could you add new rooms or repair major structural damage. Any project that takes more than six months to complete or requires two or more payments per contractor is not allowed. To summarize, bigger projects are better-suited for the Standard 203k.

203K IMPROVEMENTS THAT ARE NOT ALLOWED

  1. Neither the Standard nor the Limited programs may be used for the following:
  2. Luxury items like swimming pools, hot tubs, tennis courts
  3. Satellite dishes or TV antennas
  4. Alterations or additions for commercial use
  5. Outdoor barbecue pits or fireplaces
  6. Landscaping or fencing

Swimming pools (although you can fill one in for health and safety issues)

ELIGIBLE PROPERTIES FOR FHA 203K home improvement loan

  1. The property and dwelling must meet the following criteria:
  2. Owner occupied (you gotta actually live there)

1 to 4-unit family dwelling, completed for at least one year (with Certificate of Occupancy), unfinished homes do not qualify

FHA-approved condos

Manufactured homes (built after aJune 15, 1976) can likely be rehabbed if they’ve been on a permanent

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