FHA 203k Loan Eligible Properties

What Types of Properties are Eligible? To be eligible, the property must be a one- to four-family dwelling that has been completed for at least one year. The number of units on the site must be acceptable according to the provisions of local zoning requirements. All newly constructed units must be attached to the existing dwelling. Homes that have been demolished, or will be razed as part of the rehabilitation work, are eligible provided some of the existing foundation system remains in place. The 203K program may also be used to convert a single family dwelling to a two, three, or four family dwelling. An existing multi-unit dwelling could be decreased to a one to four family unit. An existing house may be moved to another property that is mortgaged or an existing house may be moved to a property that is not mortgaged. However in the latter case funds will not be released until the foundations have been installed and the house place on the foundations and the work has been inspected. We at Concepts Building Systems are FHA compliance inspectors.

FHA 203(k) For Mixed Use Residential/Commercial A 203K mortgage may be originated on a “mixed use” residential property provided: (1) The property has no greater than 25 percent (for a one story building); 33 percent (for a three story building); and 49 percent (for a two story building) of its floor area used for commercial  purposes; (2) the commercial use will not affect the health and safety of the occupants of the residential property; and (3) the rehabilitation funds will only be used for the residential functions of the dwelling and areas used to access the residential part of the property.

A small business operator should look into the FHA 203k loan. We can help

Coming Next remodeling Condominiums. 

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Seven Unit Limitation:

HUD regulations and policies state that a real estate owner should not be allowed to accumulate FHA insured properties that constitute a multifamily project. In general, a borrower may not have an interest in more than seven rental units within an immediate area. HUD defines an immediate area as properties being within a two block radius.

The seven unit limitation does not apply if the neighborhood has been targeted by a State or local government for redevelopment. The State or local government has submitted a plan to HUD that defines the area, the extent and type of redevelopment in the target area. A restriction may still be imposed within a redevelopment area in order to prevent undesirable concentrations of units under a single or group ownership. HUD will determine that the seven unit limit is inapplicable only if the real estate owner will own no more than 10 percent of the housing units  in the designated redevelopment area or sub-area and the real estate owner has no more than eight units on adjacent lots. Read the rest of this entry »

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