Rehabilitation Loan

FHA 203K and 203K Streamline

The FHA Section 203K (Full) and 203KS (Streamline) insurance program enables borrowers to finance both the purchase or refinance of home and the cost of its rehabilitation through a single mortgage.

What is the Difference Between a 203K and 203KS?

The 203K will allow major remodeling up to the maximum loan amount that FHA will insure in your area, where the 203KS is for minor repairs that are not structural up to $35,000.

Eligible Repairs for a 203K (Full)

Examples of eligible improvements might include:

• Structural alterations and/or room additions
• Remodel bathrooms and kitchens, including permanently installed appliances, i.e.; built-in range, oven, microwave, dishwasher, etc.
• Elimination of health and safety hazards
• Foundation Repair
• Installation of Well and/or Septic System
• Plumbing and Electrical repair or replacement’
• New roofs, gutters & downspouts
• Flooring, tiling and carpeting
• Interior and exterior painting
• Major landscape work and site improvement including patios, decks and terraces

Eligible Repairs for a 203KS (Streamline)

Because this program is intended to facilitate uncomplicated rehabilitation and the limitation of $35,000 in repairs, eligible improvements are limited and cannot include any major rehabilitation or remodeling, new construction such as room additions, repairs to structural damage such as foundations.

Items that are not allowed under the 203KS are:

• Pool repair or construction
• Adding or repairing a driveway or sidewalk
• Sub-floors- this refers to the structural elements under the flooring – not the plywood base that the finish flooring is resting on
• Replacing posts in crawl spaces
• Landscaping or similar site amenities
• Repairing any structural damage
• Room additions
• Any repair or improvement that will require more than 6 months to complete or will displace the borrower for more than 30 days

How The Program Works

The first step is to select a contractor and have them supply you with a detailed bid or cost estimate clearly stating the nature and type of all repairs and the cost itemization for each repair,  copy of their contractors license (required for all electrical or plumbing repairs), copy of the contractors insurance or bond (if required), copy of the contractor’s qualifications including 3 references.

Submit this documentation to Pulse Funding for review and approval. Once this step has been completed, we will send you a Homeowner/Contractor agreement itemizing the repairs outlined in the bid and stating that the work will be started within 30 days of closing. This information will then be supplied to the appraiser.

The Loan-To-Value is based on the less of 96.50% of:

• The sales price or “as is” appraised value + repairs OR
• 110% of the “as completed” appraised value

*Important Note on 203KS – The initial draw of 50% will be disbursed at closing to allow for the rehabilitation to begin immediately. The 2nd draw will be disbursed to the contractor after the work has been completed and inspected by the lender.