The Federal Housing Administration (FHA) has created a loan program that allows a buyer to purchase an existing home or re-finance their current one with a minimum down payment and include funding for improvements and renovations; it’s called an FHA 203k Loan. For those potential buyers, lenders and realtors utilizing the program, the following information will be helpful in understanding the role of the 203k Consultant.

The Federal Housing Administration was started in 1934 by Congress to help homebuyers obtain mortgages that had less restrictive terms than conventional mortgages during a period of high unemployment and poor economic conditions…sound familiar?

The FHA Loan or 203(b) as it is called today has always been a mainstay of the loan guarantee programs since its beginnings. This program requires that the home be “ready for occupancy” and in most cases the seller had to make the minor repairs to satisfy the loan requirements if the building or site were in need of repairs. Of course this doesn’t include any improvements or upgrades. However, in today’s marketplace that can be a daunting task, if possible at all with many properties bank owned, foreclosures or sold “as-is.”

The next generation of the FHA Loan Program created to help solve this problem is the 203(k) loan. This solves the rehabilitation problem buy fully funding a loan that “includes” the money for repairs and renovations while providing the assurances of an FHA loan to the buyer and satisfying the strict requirements of the FHA for health and safety.

These mortgages are based on the projected value of the home in its completed state after the work has been done or “after improved” taking into account the cost and extent of the work done.

HUD has taken a strong position to encourage this program and has taken steps to make this process easier than ever by creating the position of a 203(k) Consultant.