FHA 203(k) Rehabilitation Mortgage Insurance Program — product details
The document provides a detailed specification of the Federal Housing Administration (FHA) Section 203(k) Rehabilitation Mortgage Insurance Program. It outlines the program’s four permissible uses (rehabilitating existing residential structures, refinancing with rehabilitation, purchasing and rehabilitating a property, and interior condo unit rehab). Two product types are described: Standard 203(k) (minimum $5,000 repair cost, requires a 203(k) Consultant) and Limited 203(k) (maximum $75,000 total costs, no mandatory consultant). The guide enumerates items that Limited 203(k) cannot finance, such as structural alterations, new construction, site improvements, and luxury amenities. It details work‑plan requirements, contractor licensing, and borrower self‑help procedures. Financeable costs, optional contingency reserves (capped at 20% of repair costs for Limited 203(k)), and allowable portions of origination fees and discount points are explained. For Standard 203(k), contingency reserve requirements are age‑based with minimum/maximum percentages. The rehabilitation period, extension process, and default triggers (work not started within 30 days, cessation >30 days, or failure to complete) are defined. Draw request protocols for both programs are covered, including mandatory mortgagee review, 10% holdback, five‑business‑day release, and material‑cost exceptions. Maximum draw counts differ: up to five draws for Standard 203(k) and up to two draws per contractor for Limited 203(k). Completion documentation varies by repair amount for Limited 203(k) (receipts/letter of completion for ≤$15,000; third‑party inspection for >$15,000). Post‑closing documentation, quality‑control responsibilities, and servicing notes (delinquency, forbearance, payment reserve) are listed. Finally, the role of the 203(k) Consultant, required HUD‑9746‑A forms, and fee caps ($375 per draw inspection, $120 change order, $225 re‑inspection) are specified, along with the mortgage payment reserve limit of 12 months for Standard 203(k) when the property cannot be occupied.
Topics
Standard vs. Limited 203(k) – Structure, Cost Thresholds, and Consultant Requirements
Compares the two product types, highlighting the $5,000 minimum for Standard, $75,000 cap for Limited, and the mandatory 203(k) Consultant for Standard but not for Limited.