Quick Answers to common questions

Q. Is this a new program?
Ans No. HUD created this program over 30 years ago back when it was known for its massive paperwork and maze of procedures. In 1994, HUD streamlined the entire program. Today, the 203(k) is the nations fastest growing loan program.

Q. Is the 203(k) restricted to single family dwellings?
Ans No. The program can be used for one to four unit dwellings, as well as condominiums, PUDS and townhouses.

Q. How much can I borrow?
Ans You can borrow up to 97% of the purchase price and ALL the renovation costs, not to exceed 110% of the AFTER completed value of the property or the HUD maximum loan amount for your county.

Q. What is the minimum I can borrow?
Ans $5,000.00

Q. Can a 203(k) loan have a 2-1 buydown feature?
Ans Yes. This allows you to qualify for an even larger loan.

Q. Is there a time limit for completing the renovations after closing?
Ans Yes. You have up to 6 months to complete the work. Additionally, there are two important time frames you should be made aware: 1) The work must begin within 30 days after loan closing and 2) work can not stop for more than 30 consecutive days prior to completion.

Q. Do I still have to make mortgage payments if I can not live in the home while under renovation?
Ans No. HUD has made a special provision with the 203(k) loan to protect you in this type of situation from having a double house expense. You may finance up to 6 months of mortgage payments in the loan if the property can not be occupied during renovation.

Q. How soon can we close?
Ans Your 203(k) closing is as timely as any other loan program. You should be in a position to close within 30-45 days after loan application.

Q. Since most common improvements are made to existing structures,is it possible to use the 203(k) to build a detached garage?
Ans No. Yes. The 203(k) is designed to allow you to improve your home while improving value.

Q. Can I do the work myself?
Ans Yes. You must be approved prior to closing to do the work by the underwriter and be able to verify your abilities. Your agreement includes the acceptance of performing the work in a timely fashion and workmanlike manner. You will be reimbursed for materials only since HUD does not permit payment for labor even if you are, by profession, a licensed general contractor. When you have been accepted to complete the work yourself, cost estimates must include materials and labor expenses. If for any reason you are unable to complete the work needed, the funds will be available to complete the job. Any unused funds an be reallocated for additional improvements or used for principal reduction.