When considering buying a foreclosed home in Arizona today, it is not entirely out of the question that the home you are looking at might be in need of a few repairs. Or maybe a lot of repairs.
The FHA 203(k) program does not allow luxury items (think $10,000 iron doors) or improvements that do not become a permanent part of the home to be financed in the program. The FHA 203(k) program is really designed for basic items such as painting, drywall work, room additions, decks and landscaping. While there are too many eligible items that are eligible for 203(k) financing, some of the most common seem to be (in no particular order):
- Remodeled kitchen
- Remodeled bathroom
- Fixing termite damage
- New exterior work (stucco)
- Replacement of plumbing fixtures
- New flooring
- New roofing
- Installation of new smoke detectors
- Major landscape improvements
- Energy conservation improvements such as new windows and new insulated doors
If you are considering buying a home that only needs minor repairs, there is another program that may be more fitting for the situation – the FHA 203(k) Streamline loan. The FHA 203(k) Streamline is a modification of the standard Section 203(k) loan in that it only allows limited repairs costing at least $5,000 but not greater than $15,000. The total mortgage amount will allow for acquisition of the property and up to $15,000 in the loan proceeds to be applied toward repair or rehab of the property.
Some of the most common repairs done under the FHA 203(k) Streamline program include:
- Repair gutters and downspouts
- Repair/upgrade of existing HVAC systems
- Minor repairs of plumbing and electrical systems
- Minor repairs of existing flooring
- Minor remodeling that does not involve structural repairs
- Exterior and interior painting
- New appliances – which may include free-standing ranges, refrigerators, washers/dryers, dishwashers and microwaves but may not exceed $2,000
- Improvements for accessibility for people with disabilities
These lists are not meant to be all-inclusive – just some of the common things that I have seen done or heard of being done in the FHA 203(k) program.
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[...] down. FHA financing will also allow you to get a special type of repair or construction loan via Streamlined 203(k), where you can borrow as much as an additional $35,000 extra to pay for the repairs that you are [...]