The FHA 203k Home Renovation Loan is a program made available by the U.S. Department of Housing and Urban Development (HUD). It provides funds for the purchase or refinance of a home and the renovation costs. If you are in the St. Louis, St. Charles MO, Jefferson County MO, Kansas City and Springfield MO areas and looking for a construction loan, there are two types of FHA 203k loans which may work for you. The first is a Streamline FHA 203k Loan which is intended for properties that need non-structural repairs such as painting, plumbing, flooring, siding, heating and air conditioning systems, new appliances or kitchen or bath remodeling. There is no minimum loan amount for the Streamline FHA 203k Loan; it has a maximum loan amount of $35,000.
The regular FHA 203k Loan allows for structural repairs such as a new deck, a room addition, removing a wall within the home, a new garage, landscaping, just to mention a few. This construction loan does not cover any improvement that does not become a permanent part of the property structure such as a swimming pool or tennis court. The minimum construction loan for this program is $5000; the maximum is determined by an After Repair Value (ARV) appraisal of the property with normal down payment or LTV requirements. FHA loan limits will also apply to higher loan amounts on both 203k loan programs. All work must be performed by a FHA 203k Loan approved contractor.
A single construction loan is used for the purchase or refinance and the cost of renovating the home. The loan offers 30 and 15 year fixed rates, as well as adjustable rates (ARM). Once the loan is approved the money will be disbursed through a title company as the work progresses, a final inspection will be required prior to final payout.
Typically the FHA 203k Loan will require 15-20 percent “contingency reserve”, this is to allow additional funds to complete the work in the event it ends up costing more than the estimate of repairs. Any overage when the work is completed will be applied to the loan as a principle reduction.
Missouri Mortgage Clearing House is celebrating its 17th year located in Fenton, MO. We also work with clients in St. Louis MO, St. Charles MO, Jefferson County MO, Kansas City MO, Springfield MO as well as throughout the entire state of Missouri. For more information or to see if you qualify please call us at (636) 717-1900, Apply Now, or fill out the information to the right and we’ll get in touch with you.