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Make Your Dream Home Come True

Make your dream home come true! Bo Smith Mortgage Financing Expert NMLS 92100

Office: 601.982.1153 bosmith@houseloan.com www.BoKnowsMortgages.com

Licensed by the Mississippi Department of Banking and Consumer Finance NMLS 92100 Not a commitment to lend. Borrower must meet qualification criteria.

1900 Lakeland Drive, Suite 5 Jackson, Mississippi 39216


203(k) By Definition

It is a single home loan with a long-term fixed or adjustable rate that is used to both finance and rehabilitate the property. The financing amount is based on the estimated value of the property after taking into account the cost of the work required.


How Can FHA 203(k) Loans Be Used? FHA 203(k) loans are used in three different ways: 1. To purchase and rehabilitate a home 2. To purchase a dwelling, move it to another site and rehabilitate it 3. To refinance an existing mortgage to rehabilitate the property


Streamline 203(k) Loan

• For homes that need minor repairs • Allows borrowers to finance the purchase of a home and make improvements or upgrades costing up to $35,000 prior to moving in • No minimum repair costs • Borrower must occupy the property as their principal residence


Before and After

Old Side of House

New Side of House


Standard 203(k) Loan •

For homes that need major rehabilitation: – Structural repairs – Landscaping improvements – Renovation costing more than $35,000

Minimum of $5,000 worth of repairs required

Borrower must occupy the property as their principal residence

FHA loan limits are based on property type and location of property

A portion of the loan proceeds are used to pay the seller or, in the case of a refinance, to pay off existing mortgage

Remaining funds are placed in escrow and released as repairs are completed

May roll in up to six months of mortgage payments if the HUD consultant determines you must be displaced during repairs


Before and After

Due to the home’s dilapidated state, the contractor had to refinish floors, prep all the walls for paint, replace all exterior doors and bring all electrical aspects of the home up to code.


203(k) Process from Start to Finish 1. Find a property and make an offer 2. Find an FHA-approved lender experienced with 203(k) loans 3. Have the property appraised 4. Home loan is approved and closed 5. Property rehabilitation begins 6. Escrowed funds are released


Property Eligibility Requirements General requirements: • Must be a one- to four-family dwelling • Construction must have been completed for at least one year • May be used to convert a one-family dwelling to a two-, three- or four-family dwelling • A multi-unit dwelling may be decreased to a one- to four-family unit


Before and After

Gutting the entire kitchen let the borrower completely decide what she wanted to have in her kitchen


Eligible 203(k) Renovations • • • • • • • • • • • • • •

New freestanding appliances Bathroom remodeling Master bedroom suite remodel Upgrading HVAC Energy efficient improvements Wells and septic repair and upgrades New siding Interior or exterior painting Attic build-outs Basement waterproofing Media room addition Second floor addition Basement finishing Floor plan additions

• • • • • • • • • • • • •

New hardwood flooring New doors and windows Plumbing and electrical upgrades Floor plan expansion New granite countertops Vaulting the ceilings GREEN improvements and enhancements Neck deck/patios New fixtures for bathtubs, sinks and kitchens Making a house handicap accessible Getting a house ready for a college student Solar panels Low flow toilets and shower heads


Before and After

Adding a built-in to this home’s living area and pulling up the carpet to expose the original hardwood floors made the home look crisp and clean.


Maximum Mortgage Amounts Purchase The lesser of the below choices: 1. The value of the property before renovation plus the estimated cost of rehabilitation, multiplied by 96.5 percent 2. The purchase price of the property plus the estimated cost of rehabilitation, multiplied by 96.5 percent 3. 110 percent of the estimated post-rehabilitation value of the property

Refinance The lesser of the below choices: 1. The existing balance on the mortgage prior to rehabilitation, plus the estimated cost of rehabilitation and allowable closing costs 2. The as-is value plus rehabilitation costs 3. 110 percent of the estimated post-rehabilitation value, multiplied by 97.75 percent


Contact Your 203(k) Loan Expert! Bo Smith Mortgage Financing Expert NMLS 92100

Office: 601.982.1153 bosmith@houseloan.com www.BoKnowsMortgages.com

1900 Lakeland Drive, Suite 5 Jackson, Mississippi 39216

Licensed by the Mississippi Department of Banking and Consumer Finance NMLS 92100

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