Delaware FHA 203k Rehab Loans

Delaware FHA 203k Loan

Delaware FHA 203k Loans can be used to renovate, rehab or just upgrade residential properties and 1-4 unit buildings as long as your are going to live in one of the units as your primary residence.  You can use a FHA 203k loan in New Castle County, Kent County and Sussex County.  You can use the FHA203k Loan to purchase and fix up your dream home or to refinance your current home to do renovations and upgrades.  You can even add appliances and energy efficient upgrades.  Call 302-703-0727 for more information or to apply for 203k loan.  You can also APPLY ONLINE

How Much Can I Borrower on FHA 203k Loan?

The maximum FHA loan amount for a 203k rehab loan is calculated by taking the purchase plus the rehab loan amount and then taking 96.5% of this total amount.

Example of Maximum Loan Calculation:

Purchase Price – $200,000

Total Rehab Loan Amount – $50,000

Maximum Loan Amount – $250,000 x 96.5% = $241,250

You are limited by the maximum Delaware FHA loan limit for each county.  You are also able to borrower up to 110% of the after repaired value (ARV) of the property based on the FHA 203k Appraisal.

The rehab and repair work is done after the loan closes and the buyer purchases the home.  The rehab loan is held in an escrow account by the mortgage lender and is paid out on a draw schedule to the licensed contractor that completes the work.

FHA 203k Rehab Loans are great for purchasing bank owned properties that need repairs or short sale properties that require repairs.

Delaware FHA 203k Loans

Qualifications for Delaware FHA 203k Rehab Loans for 2020:

  • Minimum 620 FICO Credit Score
  • Purchasing as a Primary Residence that will live in for at least one year
  • Repairs & Rehab Work Must be Completed by a Licensed Contractor
  • Must Use a FHA HUD Fee Inspector for a Full 203k Loan
  • 2 Year Wait Period from Chapter 7 Bankruptcy Discharge

FHA 203k Loans

Eligible Repairs for Delaware FHA 203k Rehab Loans for 2020:

FHA Limited 203k Loan Repairs(Formerly Streamline 203k):

  • Roofs, Gutters and Downspouts
  • Plumbing and Electrical Systems
  • HVAC Systems (Heating, Venting & Air Conditioning)
  • Minor Kitchen and Bath Remodels
  • Weather Stripping and Insulation
  • Interior and Exterior Painting
  • New Windows & Doors
  • Improvements for persons with disabilities
  • Energy Efficient Improvements
  • Stabilizing or Removing Lead-Based Paint
  • Decks, patios & porches
  • Finishing Basements
  • Septic or Well Systems
  • Purchase of New Kitchen Appliances or Washer/Dryer

FHA Full 203k Loan Repairs:

  • Structural alterations and reconstruction
  • Modernization and improvements to the home’s function
  • Elimination of health and safety hazards
  • Repairs to pools that are in need of health and safety hazards
  • Changes that improve appearance and eliminate obsolescence
  • Reconditioning / Replacing Plumbing
  • Installing a Well and/or Septic System
  • Adding or replacing roofing, gutters, and downspouts
  • Adding or replacing floors and/or floor treatments
  • Major landscape work and site improvements
  • Enhancing accessibility for a disabled person
  • Making energy conservation improvements
  • Conversion of a property of any size to a one-to-four unit structure

Can You Utilize a FHA 203k Loan to Make Upgrades to an Older Home?

It is a common misconception that renovation loans are intended ONLY for run-down and dilapidated properties or those in need of repair. The truth is that renovation loans can be utilized for a number of different reasons, including to make upgrades to older homes.

Renovate an Older Home the Smart Way (Ditch the Credit Cards)

Depending on your  vision for the home and the scope of work involved to make renovations, the process can grow costly. Before applying for home improvement store credit cards and seeking other alternative forms of borrowing money, clients should consider a FHA 203k loan option. Many people find success in using a renovation loan to finance the major aspects of their home upgrade. Then, if needed, they can turn to home improvement store credit cards to supplement the less expensive remainder of the project.

There are pros and cons to any option worth considering, but check out the following examples to gain a better understanding of what we mean:

Example NOT Using a Renovation Loan

  • $200k purchase using FHA 203(b) at 96.5% LTV
  • $30k renovation including contingency, etc. (but not included in the loan)
  • $193k Loan amount
  • $7k Cash to close

In this example, the borrower still needs to find $30k in out-of-pocket costs to finance the repairs. All in with cash to close and out of pocket renovation costs is $37k.

Example USING a Renovation Loan

  • $230k purchase using FHA 203k loan at 96.5% LTV (contingency built in as well)
  • $221,950 Loan amount
  • $8,150 Cash to close

In this example, the all in with cash to close and zero out-of-pocket costs for renovation is $8,150. The difference is nearly $29k

Apply for a FHA 203k Rehab Loan today by calling 302-703-0727 or online at FHA203k Application

FHA 203k Loan