In this special 203K FHA Loan, what types of improvements can I make?
- Repair/replace roofs, gutters and downspouts.
- Repair/replace HVAC systems.
- Repair/replace plumbing and electrical systems.
- Repair/replace flooring.
- Minor remodeling such as Kitchens and Baths
- Painting, both exterior and interior
- Weatherization
- Purchase and Installation of Appliances
- Lead-based Paint Abatement
- Repair/replace decks, patios, porches
- Basement remodeling
- Basement waterproofing
- Window and door replacement
- Septic System and or Well Repair
All these things can all be included in the 203K FHA Rehab Loan. All repairs and work must be done by a
certified contractor on HUD's approved list. They are all places that you know and deal with on a regular basis including Lowes and Home Depot as examples. The loan is used to bring the home up to a suitable condition without going overboard. There are certain restrictions as to what can be done. A good example of this would be a granite counter in your kitchen. Will it effectively boost the value of the home OR is the cost too exorbitant to be recouped for the neighborhood? Each situation is different.
I sold a foreclosure just this year where this loan was used and the home is now wonderfully updated. New kitchen cabinets were added as half the old ones were stolen from the foreclosed owner. The furnace needed to be replaced because the old owner cut out the blower motor and other mechanicals on the inside just to be nasty. Let's not forget that the pipes froze (owner had nothing to do with this one) and those were also repaired.
It takes work and alot of patience for this type of undertaking and loan. It can be worthwhile effort for just the right buyer with the right situation.
The FHA 203K Renovation loan is a great option for an owner occupant purchasing any property requiring renovation. I have never seen a HUD approved contractor list though. Each contractor must be licensed and insured and we approve them on a loan by loan basis.
Rodney is correct that there is no HUD approved list for contractors. HUD guidelines permit the borrower to select any contractor s/he wants as long as there is no conflict of interest. It's the lenders responsibility to determine the acceptability of the contractor by verifying the contractor's license, insurance, references, credentials, experience and competency of the 203k. Since lenders do not educate contractors on the 203k, contractors receive their education and certification from the 203k Contractor Directory located at http://203kContractors.com.
While Lowes and Home Depot are involved as General Contractors for the 203k, they only do the Streamline version and do not do the most common Standard/Rehab version. When the borrower wants to use Lowe's or Home Depot as their GC, a lot of lenders require the borrower to do their 203k under a self-help arrangement. Just FYI.
Rodney: I guess it depends on the lender here. I used Wells Fargo before and another lender here also has a list. No people/friends that are not licensed, etc. They have to be certified as Paul says in his reply. Thank you for your input to clarify that.
Paul: Well as I said above here we have a list. Maybe what the LO should have explained is a contractor certified list of which Home Depot & Lowes were on. I know they were not just letting anyone, family members etc. work on the buyers home. Thank you also for your clarification.
Great program if the contracters are any good. Sadly, my area doesn't have any good quality contrtactors listed with HUD
William,
There is one Certified 203k Contractor in the Twin Cities area. http://203kcontractors.com/contractor-search?state=MN&city=Minneapolis&skills.
Bill: There you go, Paul's found one for you. Thanks for adding that link so others can find contractors in their state.