I Want to Remodel but Don't Have the Funds—What Can I Do?

Many of us wish we could improve on our current home or think of purchasing a fixer-upper but don’t have the funds to fix-it-up. Did you know that you might qualify to rehab a home you own or are purchasing with a HUD 203(k) rehabilitation loan? To provide funds for the rehabilitation, the mortgage amount is based on the projected value of the property with the work completed, taking into account the cost of the work.

Example of Eligible Improvements

• Repair/replacement of roofs, gutters and downspouts
• Repair/replacement of flooring
• Minor remodeling that does not involve structural repairs (i.e.: kitchens and bathrooms)
• Exterior and interior painting
• Improvements for accessibility for persons with disabilities
• Lead-based paint stabilization or abatement of lead-based paint hazards
• Repair/replacement/addition of exterior decks, patios, porches
• Replacement of window and doors and exterior wall re-siding

 Examples of Ineligible Improvements

• Major rehabilitation or major remodeling, such as the relocation of a load-bearing wall
• New construction (including room additions)
• Repair of structural damage
• Landscaping or similar site amenity improvements
• Any repair or improvement requiring a work schedule longer than six (6) months

Application Process

• Preliminary Feasibility Analysis

The extent of the rehabilitation work required is determined with a rough cost estimate of the work. An expected market value of the property after completion of the work is determined.

• Homebuyer/Homeowner Selects HUD Mortgage Lender
• Consultant Prepares Work Write-up and Cost Estimate
• Fee Consultant Visits Property

The homebuyer and contractor (where applicable) meet with the fee consultant to ensure that the scope of work and exhibits are acceptable.

• Appraiser Performs the Appraisal
• Lender Reviews the Application
• Rehabilitation Construction Begins

At loan closing, the mortgage proceeds will be disbursed to pay off the seller (if a new purchase) and the Rehabilitation Escrow Account will be established. Construction may begin.

• Completion of Work/Final Inspection

This is a great option to consider. So the 1^st steps will be to talk to your Real Estate Agent if you are purchasing, Remodeling Contractor to obtain an estimate, and then a HUD lender for review.

Susan Lawson is the Business Development Manager for Guedes Constructionand the Community Network Coordinator for the non-profit organization Soldiers’ Angels. She can be reached via email for Guedes atsusan@guedesconstruction.com or for volunteering and information on how to support our military through Soldiers’ Angels email Susan at ctlca26@gmail.com