Frequently Asked Questions

Can An Investor Use The 203(k) Loan? No, in October, 1996, HUD placed a moratorium on investor participation in the 203(k) Rehabilitation Mortgage Program. You can, however, purchase a single family home and convert it into a duplex and rent out the second unit or purchase a four unit home and rent out the three other units. 


Is There A Minimum Amount Of Rehabilitation Required For A Standard 203(k)?Yes, there is a minimum $5,000 requirement for the eligible improvements on the existing structure on the property. Minor or cosmetic repairs by themselves are unacceptable; however, they may be added to the minimum requirement. Under The Streamlined 203(k) program, a minimum repair/improvement cost requirement is not applicable.  


Can A Six (Or More) Unit Building Be Done Using The 203(k) Program?No, however, the building could be renovated and reduced to a four unit building. 


Can A Home Be Converted To Provide Access For A Disabled Person?Yes, a home can be remodeled to improve the kitchen and bath to accommodate a wheelchair access. Wider doors and handicap ramps can also be included in the cost of rehabilitation.  


Is There A Time Period On The Rehabilitation Construction Period?Yes, the Rehabilitation Loan Agreement contains three provisions concerning the timeliness of the work. The work must begin within thirty days of execution of the Agreement. The work must not cease prior to completion for more than thirty consecutive days. The work is to be completed within the time period shown in the Agreement (not to exceed six months); the lender should not allow a time period longer than that required to complete the work. 


Is A Contractor Required To Do The Work? No, however, if the borrower wants to do any work or be the general contractor, they must be qualified to do the work, and do it in a timely and workmanlike manner. It is very important that the work be done in a time frame that will assure the completion of the work that will be agreed upon in the Rehabilitation Loan Agreement (signed at closing). A borrower doing their own work can only be paid for the cost of the materials. Monies saved can be allocated to cost overruns or additional improvements.   


Can Mortgage Payments (PITI) Be Included In The Mortgage?
Yes, using The Standard. Up to six months of payments may be included in the mortgage if the property is not able to be habitable due to condition of the property during the rehabilitation period.