Some of the best home values are bank-owned properties that need repairs. The Housing and Urban Development's (HUD) 203(k) renovation loan program allows home buyers to save money by including rehabilitation construction costs in their standard FHA home loan.
The HUD 203(k) renovation loan program provides funds for both the purchase and renovation of a home packaged into one mortgage loan. Once the purchase of the home is closed, renovation funds are held in escrow to pay for pre-determined renovation work done by approved renovation contractors. The amount you can borrow is based on the appraised value after remodeling, not before, so you can get the money you need to fix up a fixer upper.
HUD 203(k) loans are available in two types: Standard and Streamlined.
The Standard 203(k) loan is intended for:
The Streamlined 203(k) loan is intended for:
A HUD 203(k) Consultant is required on Standard 203(k) loans. The HUD 203(k) Consultant assists the home buyer by:
The consultant also works with the contractor and lender to develop a draw inspection schedule to complete the renovation.
For more information on the HUD 203(k) loan program, contact your National Property Inspections HUD 203(k) Consultant.