FHA 203 (k)

FHA 203K loans may be used to do minor remodeling and non-structural repairs on your primary residence. Bluecastle Lending does Limited 203 (k) loans.  Below are some highlights:

  • Minor remodeling and non-structural repairs only
  • Minimum $5,000 repair amount and maximum $35,000 including all costs
  • A 203(k) fee consultant is not required but may be used
  • Repairs must start within 30 days and be completed within 6 months
  • Maximum of 2 draws (Initial and Final)
  • Projects cannot have more than three (3) specialized contractors without the use of a General Contractor to manage the project
  • Painting and appliance purchases may be included as self-help

Limited 203 (k) Eligible Repairs and Improvements

  • Eliminating health and safety hazards to meet HUD’s minimum property requirements (MPRs)
  • Repair/replacement of roof provided the structural integrity of the structure will not be impacted by the work being performed; siding; gutters and downspouts
  • Repair/replacement/upgrade of existing: HVAC systems, plumbing, and electrical systems
  • Repair/replace/add exterior decks, patios, porches (must increase As-Is Property Value equal to the dollar amount spent on the improvement)
  • Minor remodeling, such as kitchens, which does not involve structural repairs
  • Painting, exterior and interior (changes for improved functions and modernization)
  • Eliminating obsolescence
  • Purchase and installation of appliances including free-standing ranges, refrigerators, washers/dryers, dishwashers and microwave ovens
  • Accessibility improvements for persons with disabilities
  • Lead-based paint stabilization or abatement of lead-based paint hazards if the structure was built before 1978
  • Septic system and/or well repair or replacement
  • Connecting to public water and sewage systems
  • Pool repairs
  • Installing/repairing fences, walkways and driveways
  • Check HUD’s website for a complete list of allowable repairs; www.hud.gov

Note: All repairs/improvements must meet HUD’s minimum property requirements and meet or exceed local building codes.

Limited 203 (k) Ineligible Repairs and Improvements

Major rehabilitation/remodeling, such as when any of the following exists:

  • Repairs/improvements requiring a work schedule longer than six months to complete
  • Rehab activities require more than 2 payments per specialized contractor
  • The required repairs arising from the appraisal requiring a HUD Consultant to develop a specification of repairs/Work Write-Up or requiring architectural exhibits/plans
  • The repair prevents the borrower from occupying subject property for more than 15 days Major remodeling and structural repairs/alterations such as 1-4 structure conversion, additions, finished attics, basements, constructing a garage, changing footprint or requiring architectural plans, etc.
  • Site improvements and landscaping
  • Constructing a windstorm shelter
  • Additions/alterations to support commercial use or to equip/refurbish space for commercial use
  • Recreational or luxury improvements such as –
    o Swimming pools
    o Exterior hot tub, spa, whirlpool bath or sauna
    o Barbecue pits, outdoor fireplaces or hearths
    o Bath houses, tennis courts, satellite dishes, photo murals, gazebos,
    o Tree surgery (except when eliminating an endangerment to existing improvements)