2. What is a 203K Loan?
An FHA Rehabilitation Mortgage (Average 203K rehab is $7,500)
First Lien Position
Owner Occupied
Assumable

3. The Advantages
Renovation cost in tax deductible mortgage rather than high cost credit cards or retail installment loans.
Can escrow payments while repairs completed.
Escrow funds in interest bearing account.
Frees cash on hand for other investment opportunities.
Only one monthly payment

4. 203(k) Eligible Properties
1-4 unit properties
Condos (interior only & max 4 units)
Existing homes complete for over 1 year
New construction on part of original foundation
Row Homes

5. 203(k) Necessary Improvements
Health and safety repairs
Corrections of code violations
Correcting structural deficiencies
Repairs necessary to meet HUD property compliance
smoke detectors

6. 203(k) Repair Ideas Structural alterations and additions
Remodeling Kitchens and Baths
Modernize plumbing, heating, AC and electrical systems
Install or repair well or septic system
Roofing, gutters, downspouts

7. Other 203(k) Improvements
New free standing appliances
Interior & exterior painting
Flooring, carpeting & tile
Swimming pool repairs
Energy efficient improvements
Other improvements that are a permanent part of the real estate

8. Ineligible 203(k) Improvements
Luxury items that are not a permanent part of the real estate are not eligible as a cost of repairs.

9. Other Important Things to Know
No cash back – left over money goes towards principal balance
3 & 4 units must be self-sustaining
Identity of Interest transactions are not permitted on 203k programs

10. Selling the 203(k)

11. Turn an old listing into a $old listing
Market house with a renovation & payment plan
Advertise renovation in newspaper ads or Community Home booklets.

12. Create a Vision for a buying decision!!
Watch for reactions to specific parts of the home.
Use phrases like…
“if you want to change the color of the carpet in the living room, you can just include that in your mortgage.” or the kitchen cabinets, bathroom fixtures, appliances, put on a deck, etc…

13. Improve your listing power!!
Get the listing by assuring the seller a quicker sale advertising their home as the “Create your own dream home!!!!”

14. Turn Renters into Homeowners
Pre-counsel borrowers to look for less expensive fixer – upper (doesn’t have the curb appeal)
A two unit can help pay the mortgage
Get great referrals and life long customers