Articles

The U.S. Department of Housing & Urban Development (HUD), through the Federal Housing Administration (FHA), has published a newly updated set of policies for its 203(k) Rehabilitation Mortgage Insurance Program. These changes enhance and update the funding terms.

FHA offers two variations of the 203(k) program: the Standard 203(k), which may be used for substantial remodeling and repairs, and the Limited 203(k), which may be used for minor remodeling and nonstructural repairs. The new enhancements modify both programs, and include:

Increasing the allowable total rehabilitation costs a borrower can finance under the Limited 203(k) program from $35,000 to $75,000 and reviewing this limit annually to ensure it continues to keep pace with market conditions.

Providing more time for rehabilitation and repair work to be completed by extending the rehabilitation period to 12 months for the Standard 203(k) and nine months for the Limited 203(k).

Allowing the financing of the 203(k) Consultant Fee in the total mortgage amount for the Limited 203(k) if a borrower chooses to use a 203(k) Consultant; and

Increasing the allowable fees that a 203(k) Consultant can charge for various activities, which have not been updated since 1995. The new fee structure is designed to appropriately compensate Consultants for their role and encourage more Consultants to participate in the program.

For more detailed information, consult your lender