FHA 203(k) and 203(k) Streamline Rehabilitation Mortgage Loan Programs
Program Overview
The FHA 203(k) and 203(k)
Streamline Rehabilitation Mortgage
Loan Programs offer first mortgage
finances for prospective homebuyers
interested in purchasing a home that
needs repairs. Mortgages under
these programs include the cost of
purchasing the home, as well as the
cost of repairs. Homebuyers
interested in purchasing and
repairing a home under this program
generally may not have owned a home
in the last three years to qualify;
but previous homeowners may qualify
if they intend to purchase a home
located in a federally
targeted area .
Under the
Homeowner’s Equity
Recovery Opportunity Loan Program
(HERO) Expansion Program, previous
homeowners or existing homeowners
may be eligible to purchase a home
that is foreclosed, abandoned,
conveyed by deed in lieu or a short
sale, regardless of location.
Existing homeowners are not required
to sell their current residence to
purchase a home through the HERO
Expansion Program. However, they
must occupy the property they
purchase with HERO Expansion funds
as their primary residence. If the
home needs repairs, the 203(k) or
203(k) Streamline Rehabilitation Mortgage
Loan Programs may be used in
conjunction with the HERO Expansion
Program.
If using the HERO Expansion
Program, deed restrictions will be
placed on the property for a period
of 5 years. Any homeowner wishing
to sell or transfer their ownership
interest within 5 years or purchase
must seek CHFA approval.
Follow the links below for more information regarding the
203(k) and 203(k) Streamline
Rehabilitation Mortgage Loan Program.
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203(k) and 203(k) Streamline
Rehabilitation Mortgage Loan Program Interest Rates
Currently, the 203(k) and 203(k)
Streamline Rehabilitation Mortgage
Loan Program is providing mortgages at the
following rate:
- Interest rate: 3.000%** (APR range 3.1 - 3.5%)
- Fees: Up to 2.5 Points for 203(k) (2.5% Origination Fee Payable to Lender) Up to 1.5 Points for 203(k) Streamline (1.5% Origination Fee Payable to Lender)
- Term: 30 years, fixed rate
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** Please note, this rate is subject
to change and additional fees may apply.
Who can
apply for a 203(k) and 203(k)
Streamline Rehabilitation Mortgage
Loan Program
loan?
Primarily, the 203(k) and 203(k)
Streamline Rehabilitation Mortgage
Loan Programs are intended to
benefit first-time homebuyers that
meet minimum credit, income, and
employment standards. These
programs can also be used in
conjunction with the
HERO Expansion
Program.
Previous homeowners may also qualify for a purchase loan
under these programs if they plan to purchase a home located
in one of 18 designated areas in Connecticut targeted for
revitalization. (See,
Targeted Areas.) Under the HERO Expansion Program,
previous homeowners or existing homeowners may be eligible
to purchase a home that is foreclosed, abandoned, conveyed
by deed in lieu or a short sale, regardless of location.
Existing homeowners are not required to sell their current
residence to purchase a home through the HERO Expansion
Program. However, they must occupy the property they
purchase with HERO Expansion funds as their primary
residence.
- Who are considered first-time homebuyers?
First-time homebuyers are those who have never purchased
a home before or have not had an ownership interest in a
principal residence for the past three years.
- What are the income guidelines to qualify
for this loan?
An applicant’s annual, before-tax household income must
not exceed the CHFA
income limits that apply to the
geographic region where the applicant intends to
purchase or refinance a home. Household income is
calculated by combining the income of all people who
will be occupying the home.
The CHFA income limits do not apply unless the applicant also borrows a
loan under the
Downpayment Assistance Program.
What
types of property can you purchase
with a 203(k) and 203(k) Streamline
Rehabilitation Mortgage Loan Program
loan?
The 203(k) and 203(k) Streamline
Rehabilitation Mortgage Loan Program requires that loan
applicants purchase homes that meet specific property
and sales price guidelines.
What
types of repairs are covered by a
203(k) and 203(k) Streamline
Rehabilitation Mortgage Loan Program loan?
Improvements and repairs under
the 203(k) or a 203(k) Streamline
Rehabilitation Mortgage Loan Program
must cost at least $5,000 and not
exceed $35,000 for the 203(k)
Streamline Rehabilitation Mortgage
Loan Program.
A 203(k) or 203(k) Streamline Rehabilitation Mortgage
loan (combining purchase price with cost of repairs) can not
be greater than the FHA Maximum Mortgage Limits applicable
for where the home is located.
A full FHA 203 K rehabilitation loan as listed in the US
Department of Housing and Urban Development (HUD) website:
http://www.hud.gov/offices/hsg/sfh/203(k)/203(k)abou.cfm,
will allow borrowers to purchase a house in need of repair
or modernization that includes both the cost of acquisition
and rehabilitation. The maximum mortgage amount cannot
exceed the applicable loan-to-value ratio and maximum dollar
amount limitation prescribed for the FHA Maximum Mortgage
Limits.
The following are examples of rehabilitation work
eligible for these programs. The types of improvements
that borrowers may make using Section 203(k) financing
include:
- Structural alterations and repair of damage to the
home, including chimneys, walls, roofs, and ceilings.
- Repair of termite and water damage.
- Conversion of a single family home to a duplex; or a
six unit building to a three-family home.
- Installation of energy-efficient features to
plumbing, heating and electrical devices.
- Installation or replacement of wells, septic tanks,
windows and hot water systems.
- Repair of flooring, roofing, handrails, downspouts
and exterior siding that improves the general livability
of the home.
- Alterations to enable handicap accessibility.
The FHA 203(k) Streamline Program as listed in the US
Department of Housing and Urban Development (HUD) website:
http://www.hud.gov/offices/hsg/sfh/203(k)/203(k)slrp.cfm,
is a limited repair program that will allow borrowers to
obtain a mortgage loan that includes the cost of acquisition
and up to an additional $35,000 that can be used to complete
moderate rehabilitation or modernization repairs to the
property prior to moving in. The maximum mortgage amount
cannot exceed the applicable loan-to-value ratio and maximum
dollar amount limitation prescribed for the FHA Maximum
Mortgage Limits.
Eligible repairs under the 203(k)
Streamline Program include:
- Basements
- Decks/Patios
- Electrical
- Floors
- HVAC Systems
- Minor Remodel
- New Appliances (up to $2,000)
- New Windows
- Painting
- Plumbing
- Roofs
- Septic & Well Repairs
- Sewer Hook-up
- Weatherization
How does the 203(k) or 203(k)
Streamline Rehabilitation Mortgage
Loan work?
A 203(k) or 203(k) Streamline
Rehabilitation Mortgage Loan covers
the cost of purchasing and
renovating the home. After the loan
closing, the funds for the home
repairs will be held by the lender
in a separate escrow account. All
work must be done by a
state-licensed general contractor.
Your Lender will handle installment
payments to the contractor.
All contracts must be in writing, including any
subsequent changes and modifications. Contracts must
specifically describe rehabilitation items and materials
required for the renovation and must include a schedule for
completion and payment terms.
What else should you know about
a 203(k) and 203(k) Streamline
Rehabilitation Mortgage Loan Program loan?
The following additional considerations
and restrictions apply to
203(k) and 203(k) Streamline Rehabilitation Mortgage Loan
Program loans.
- You may qualify for
help with your down payment and
closing costs.
For those who lack sufficient
funds to cover the upfront
expenses associated with
purchasing a home, assistance is
available statewide for
qualified borrowers through the
Downpayment Assistance Program
(DAP).
- FHA Mortgage
insurance is required with a
203(k) or 203(k) Streamline
Rehabilitation loan.
- You may be required to pay a
special federal tax if you sell
your home within nine years.
Under certain circumstances,
CHFA mortgage loans may be
subject to the Federal Recapture
Tax at the time the property is
sold. The tax will apply if a
borrower sells his or her home
within nine years of the
purchase date, makes a profit on
the sale and has an income that
exceeds
federal recapture tax limits
at the time of the sale.
- You are required to have a
construction contract with the
builder or general contractor.
The builder or general
contractor must be registered
and/or licensed with Connecticut
Department of Consumer
Protection and must have
appropriate insurance. The
lender will review the
credentials of builders and
general contractors to ensure
they meet the required levels of
experience and expertise.
- A contingency
reserve of 15% of the
rehabilitation costs will be
retained by your lender. Any
unused funds will be applied to
the principal curtailment.
How do you apply for a
203(k) and 203(k) Streamline
Rehabilitation Mortgage Loan Program loan?
To apply for a 203(k) or 203(k)
Streamline Rehabilitation Mortgage
loan, a prospective borrower should
contact one of the 203(k)-approved
CHFA Participating Lenders for guidance
through the loan application process.
Questions? Contact CHFA.
Prospective borrowers should
first contact the lender for this
program for information on this loan
program. For additional assistance,
borrowers may contact CHFA’s Single
Family Underwriting department.
Mailing Address:
CHFA
Attn: Single Family Underwriting
999 West Street
Rocky Hill, CT 06067-4005
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Documents related to the 203(k) and
203(k) Streamline Rehabilitation
Mortgage Loan Program
The following documents are
related to the 203(k) and 203(k)
Streamline Rehabilitation Mortgage
Loan Program.
| Related Documents |
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