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FHA 203(K) Standard and 203(K) Limited Rehabilitation Mortgage Loan Programs 

Program Overview

The FHA 203(k) and 203(k) Limited 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 .     

Follow the links below for more information regarding the 203(k) and 203(k) Limited Rehabilitation Mortgage Loan Program.  

 

FHA 203(K) Standard and 203(K) Limited Rehabilitation Mortgage Loan Program Interest Rates/ Fees

Currently, the 203(k) and 203(k) Limited Rehabilitation Mortgage Loan Program is providing mortgages at the following rate:

    • Government Insured Interest Rate: 3.250%** (APR range 3.35 - 3.75%)
    • Fees: Up to 2.5 Points for 203(k) Standard (2.5% Origination Fee Payable to Lender) Up to 1.5 Points for 203(k) Limited (1.5% Origination Fee Payable to Lender) Additional fees may apply.
    • Term: 30 years, fixed rate

** Please note, this rate is subject to change and additional fees may apply.


 

Who can apply for a 203(k) and 203(k) Limited Rehabilitation Mortgage Loan Program loan?

Primarily, the 203(k) and 203(k) Limited Rehabilitation Mortgage Loan Programs are intended to benefit first-time homebuyers that meet minimum credit, income, and employment standards.  

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.)   The CHFA income limits do not apply unless the applicant also borrows a loan under the Downpayment Assistance Program.    

  • 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 based on size.  

    There are no income limits for a 203(k) or 203(k) Limited if purchasing in a targeted area, unless the borrower is obtaining a Downpayment Assistance loan.  

 

What types of property can you purchase with a 203(k) and 203(k) Limited Rehabilitation Mortgage Loan Program loan?

The 203(k) and 203(k) Limited Rehabilitation Mortgage Loan Program requires that loan applicants purchase homes that meet specific property and sales price guidelines.   

  • Property Guidelines:

    In order to qualify for these programs, the borrower must use the loan to purchase and repair a home in which the borrower will reside as a principal residence: 

    • The home must become the principal residence of the borrower no later than one year from the closing of the loan.
    • The borrower may not use the loan to purchase recreational, vacation, investment, commercial or rental properties (unless the borrower is an owner-occupant of an eligible multi-family residence up to a maximum of 4 units)
    • A loan under this program will cover the cost of converting commercial property to residential property. No part of the purchased property may be designed for commercial purposes.
    • In addition, the property must meet one of the definitions listed below: 
      • Existing single-family home or FHA-approved condominium *** 
      • Existing multi-unit dwelling to be converted into a two- to four-family home
    • Mobile homes are not eligible for these programs.   

      *** Owner/occupant borrowers only; no investors. Rehabilitation is limited only to the interior of the unit. The maximum mortgage amount cannot exceed 100 percent of after-improved value.
  • Sales Price Guidelines:
    In order to qualify for these programs, the total purchase cost together with the cost of rehabilitating the home, must not exceed the FHA Maximum loan limits established for the specific city or town in the state where the property is located. 
    (See, the FHA maximum loan limits.) 

 

What types of repairs are covered by a 203(k) and 203(k) Limited Rehabilitation Mortgage Loan Program loan?

Improvements and repairs under the 203(k) or a 203(k) Limited Rehabilitation Mortgage Loan Program must cost at least $5,000 and not exceed $35,000 for the 203(k) Limited Rehabilitation Mortgage Loan Program.   

A 203(k) or 203(k) Limited 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) Limited 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) Limited 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) Limited Rehabilitation Mortgage Loan  work?

A 203(k) or 203(k) Limited 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) Limited Rehabilitation Mortgage Loan Program loan? 

The following additional considerations and restrictions apply to 203(k) and 203(k) Limited Rehabilitation Mortgage Loan Program loans.

  • 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) Limited 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 may be eligible to receive reimbursement from CHFA if you are required to make the Federal Recapture Tax payment.   

  • 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) Limited Rehabilitation Mortgage Loan Program loan?

To apply for a 203(k) or 203(k) Limited Rehabilitation Mortgage loan, a prospective borrower should contact one of the 203(k)-approved CHFA Participating Lenders for guidance through the loan application process:

Participating Lender List Found: 4 matches     Displaying: 1 - 4 
LenderContact Info
MORTGAGE MARKETS CUSO, LLC
616 Burnside Avenue
East Hartford, CT 06108
Phone: 860-290-4786
Email: lterry@mortgagemarketscuso.com

NORCOM MORTGAGE
38 Security Drive
Avon, CT 06001
Phone: 860-606-0525
Email: colleen.fazzino@norcom-usa.com

SAVINGS INSTITUTE BANK AND TRUST
803 Main Street
Willimantic, CT 06226
Phone: 800-423-0142
Email: Melissa_Phillips@banksi.com

WEBSTER BANK
200 Executive Blvd.
Southington, CT 06489
Phone: 866-404-7040
Email: rabbott@websterbank.com
LenderContact Info

 

 


 

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.

Phone:     (860) 571-3502
Fax:(860) 571-3550
Email:sfaminquiry@chfa.org


Mailing Address:
CHFA
Attn: Single Family Underwriting
999 West Street
Rocky Hill, CT 06067-4005


 

Documents related to the 203(k) and 203(k) Limited Rehabilitation Mortgage Loan Program

The following documents are related to the 203(k) and 203(k) Limited Rehabilitation Mortgage Loan Program.   

Related Documents Found: 14  matches     Displaying: 1 - 14 
FileSizeType
018 Borrower Signature Affidavit 014-0718 8-2017
This form must be completed by all borrowers executing closing documents on CHFA first and second mortgage loans. Form must be included in all loan closing packages delivered to CHFA loan servicers on and after September 4, 2017.
358Kpdf

059 Income and Sales Price Limits - 064-0308 Rev 6-2017r
This manual provides information regarding the CHFA Loan Programs available with underwriting overlays, credit scores, applicable servicers and more.
195Kpdf

Counseling Class Online - Homebuyer Registration Instructions Rev 10-17-17
Instructions for registering for the "FREE" CHFA Online Pre-Closing Homebuyer Education offered thru eHome America.
997Kpdf

Counseling Class Online - Lender Registration Instructions Rev 8-16
Lender Instructions for obtaining a loan origination system (LOS) "coupon code" for CHFA borrowers to use in registering for "Free of Charge" Online Homebuyer Counseling thru CHFA ehome America website.
727Kpdf

Counseling Class Schedule - 8 Hour Pre-Purchase Education Class - 1Q 2018
This chart list the 1st quarter class schedules for the Pre-Purchase Education classes. These classes are available to prospective homebuyers.
105Kpdf

Counseling Class Schedule - 8 Hour Pre-Purchase Education Class - 4Q 2017
This chart list the 4th quarter class schedules for the Pre-Purchase Education classes. These classes are available to prospective homebuyers.
222Kpdf

Counseling Class Schedule - 3 Hour Pre-Closing Education Class - 1Q 2018
This chart list the 1st quarter schedules for the Pre-Closing Education classes. These classes are available to homebuyers who have a reservation loan number for a CHFA loan.
102Kpdf

Counseling Class Schedule - 3 Hour Pre-Closing Education Class - 4Q 2017
This chart list the 4th quarter schedules for the Pre-Closing Education classes. These classes are available to homebuyers who have a reservation loan number for a CHFA loan.
94Kpdf

Counseling Class Schedule - Financial Fitness - 1Q 2018
This chart list the 1st quarter Financial Fitness couseling available to homeowners and homebuyers. This program is required for clients accepted into the Mortgage Crisis Job Training Program and is available to other clients.
87Kpdf

Counseling Class Schedule - Financial Fitness - 4Q 2017
This chart list the 4th quarter Financial Fitness counseling available to homeowners and homebuyers. This program is required for clients accepted into the Mortgage Crisis Job Training Program and is available to other clients.
82Kpdf

Counseling Class Schedule - Landlord Class - 1Q 2018
This chart list the 1st quarter schedules for the Landlord Education classes. This class is required for the purchase of a 2-to-4 family home financed by CHFA. It is also available to any potential 2-to-4 family homeowner.
91Kpdf

Counseling Class Schedule - Landlord Class - 4Q 2017
This chart list the 4th quarter schedules for the Landlord Education classes. This class is required for the purchase of a 2-to-4 family home financed by CHFA. It is also available to any potential 2-to-4 family homeowner.
90Kpdf

Program Brochure - FHA 203(k) Rehabilitation Mortgage Programs (Spanish) 7-3-14
These are rehabilitation mortgage loan programs that offer mortgage financing for homebuyers interested in purchasing a home in need of repairs.
520Kpdf

Program Brochure - FHA 203(k) Rehabilitation Mortgage Programs 7-3-14
These are rehabilitation mortgage loan programs that offer mortgage financing for homebuyers interested in purchasing a home in need of repairs.
463Kpdf
FileSizeType
Found: 14  matches     Displaying: 1 - 14