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FHA 203-k Rehab Mortgage Program 

In the past, buying a home and fixing it up required a large down payment and a bunch of cash after closing. 

Today a buyer can use the FHA 203-k Rehab Loan to acquire the property and fund the renovations in one simple mortgage. At Poli Mortgage we call the program the "Repair and Restore Home Loan".

It is quite common to come across a home in a great neighborhood, with a big yard, plenty of square footage and in need of a whole bunch of TLC. 

NOTE: The FHA 203-k is available for purchasing a home + borrowing for renovations. It is also available as a refinance, so you can borrow renovation funds to fix up the home you live in now


What is a Rehab Loan? 

FHA Rehab Mortgage Loans

A rehab loan is a mortgage program where you can borrow enough money to buy the home and actually borrow additional funds that you can use to make renovations to the home.

A) At the closing, the seller will get all the money due so you can take possession of the home and you will have a predetermined "set aside" that is placed in escrow for you to draw on as the contractor completes various stages of work. 

B) As a stage is completed, an inspector will visit the home to verify the work in that stage is completed and fill out an authorization to release moneys from the escrow account to pay the contractor. 

C) Your contractor will be able to be paid up front for materials and a small portion of the labor. The balance of the contractor's profit is held until a release is authorized by the inspector. This protects you from being abandoned by the contractor with unfinished work. 

A Rehab Loan is a great way to build equity in a home quite quickly. We will have an appraisal completed that indicates the value "as is" and "as completed". Once the work is completed, you will have instant equity and you will be able to do things like, eliminate PMI and even take cash out after the seasoning period. 


What can the rehab funds be used for?

The renovation funds can be used for just about any improvements that are attached to the home, here are a few examples:

  • Structural improvements
  • Bedrooms and closets
  • New Kitchens - Including appliances 
  • New Bathrooms - Including fixtures
  • Flooring and carpet
  • Roof repair
  • New heating systems
  • New air conditioning systems
  • Plumbing
  • Electrical
  • Decks and patios
  • Finished basements
  • Laundry rooms
  • Fixing up tenant's units
  • Customary soft costs


It is important to note that you will need professionally licensed, third party contractors to handle all the bidding and the work. The program does not allow for you to be your own contractor. 

FHA 203k Rehab Loans

What are the Basic Guidelines and Requirements to get Approved for a FHA 203-k Rehab Loan? 


Maximum Amounts You Can Borrow

The total loan including purchase price and renovation moneys need to be under the county loan limits set by FHA. You can check these limits online HERE toggle the drop down to your state and then type in your county name, then hit SEND. 

The FHA 203-k Streamline allows for the renovation portion to be a maximum of $35,000.


Your Down Payment Requirement for a FHA 203-k Purchase

In order to determine how much you will need to put down to purchase a home and make renovations simultaneously will look like this: 

Add your Purchase Price + Renovation Money + Closing and Soft Costs then Mutiply by .035 or 3.5%. 

Your mortgage will be 96.5% of the total project cost. 


Your Interest Rate on a 203-k Rehab Loan

All of our FHA Programs carry a 30 year fixed interest rate and the rates are very similar to a traditional FHA mortgage. 

There is a very small add-on to the rate due to the added risk in the program. 

However, FHA allows for a Streamline Refinance as well, this is a very simple refinance transaction whereby we do not need to re-verify your information. You will be able to slide down to market interest rates with little or no closing costs. 


Property Types that Qualify for the FHA 203-k Program

The FHA 203-k allows for Single Family Residences and Multi Family (2-4 Family) residences as well. 

Please remember, FHA requires that you live in the property after closing. The property cannot be held for investment, the property must be "Owner Occupied". 


Contractor Requirements

The contractor must be a third party, it cannot be you. The contractor must be on our "approved contractor list" or they must qualify for our approved list.  

Any contractor can apply for the approved list and many will not have any problems qualifying. 


One Time Closing

The entire transaction will close at once, this is referred to a "One Time Close". You will not need to come back to the closing agent's office to re-close during the loan draw period or after the work is completed. 


The Streamline FHA 203-k Repair and Restore Loan is a great way to buy a great house at a deep discount and make it the home of your dreams. 

Poli Mortgage Group is here to help you and guide you step by step through the process from application to project completion. 

We offer FHA 203-k Rehab Mortgages in the following states: 


Give us a call 866-353-POLI (7654) - Let's see what we can do for you today? 


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