When a homebuyer wants to purchase or refinance a house in need of repair or modernization, the homebuyer usually has to obtain financing first to purchase the dwelling; additional financing to do the rehabilitation construction; and a permanent mortgage when the work is completed to pay off the interim loans with a permanent mortgage. Often the interim financing (the acquisition and construction loans) involves relatively high interest rates and short amortization periods. The Section 203(k) program was designed to address this situation. The borrower can get just one mortgage loan, at a long-term fixed rate, to finance both the acquisition and the rehabilitation of the property. 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.

1. How to Buy a Home and Finance Repairs

2. 203K & 203K Streamline
How to Buy a Home and Finance Repairs

4. Focus on FHA

5. Focus on FHA
• FHA market share dropped from 19% in 1996 to under 6% in
2006

6. Focus on FHA
• FHA market share dropped from 19% in 1996 to under 6% in
2006

7. Focus on FHA
• FHA market share dropped from 19% in 1996 to under 6% in
2006
• Mid‐2007 saw FHA loan applications soar nearly 50%

8. Focus on FHA
• FHA market share dropped from 19% in 1996 to under 6% in
2006
• Mid‐2007 saw FHA loan applications soar nearly 50%

9. Focus on FHA
• FHA market share dropped from 19% in 1996 to under 6% in
2006
• Mid‐2007 saw FHA loan applications soar nearly 50%
• NOW ‐ 203K Makes a big comeback due to the market supply
of REO properties!

10. • Flexible enough for your first‐time home buyers
• Streamlined property standards and paperwork
• Renovation option through the “k” or streamline “k”
• Innovative ways for a seller to market to buyers

11. For The Agent
• Flexible enough for your first‐time home buyers
• Streamlined property standards and paperwork
• Renovation option through the “k” or streamline “k”
• Innovative ways for a seller to market to buyers

12. For The Agent
• Flexible enough for your first‐time home buyers

13. For The Agent
• Flexible enough for your first‐time home buyers

14. For The Agent
• Flexible enough for your first‐time home buyers
• Streamlined property standards and paperwork

15. For The Agent
• Flexible enough for your first‐time home buyers
• Streamlined property standards and paperwork

16. For The Agent
• Flexible enough for your first‐time home buyers
• Streamlined property standards and paperwork
• Renovation option through the “k” or streamline “k”

17. For The Agent
• Flexible enough for your first‐time home buyers
• Streamlined property standards and paperwork
• Renovation option through the “k” or streamline “k”

18. For The Agent
• Flexible enough for your first‐time home buyers
• Streamlined property standards and paperwork
• Renovation option through the “k” or streamline “k”
• Innovative ways for a seller to market to buyers

19. • Flexibility on credit and bankruptcy
• Flexibility on down payment, and no reserves
• No limitations on income
• Sellers can help up to 6%
• Always assumable

20. For The Buyer
• Flexibility on credit and bankruptcy
• Flexibility on down payment, and no reserves
• No limitations on income
• Sellers can help up to 6%
• Always assumable

21. For The Buyer
• Flexibility on credit and bankruptcy

22. For The Buyer
• Flexibility on credit and bankruptcy

23. For The Buyer
• Flexibility on credit and bankruptcy
• Flexibility on down payment, and no reserves

24. For The Buyer
• Flexibility on credit and bankruptcy
• Flexibility on down payment, and no reserves

25. For The Buyer
• Flexibility on credit and bankruptcy
• Flexibility on down payment, and no reserves
• No limitations on income

26. For The Buyer
• Flexibility on credit and bankruptcy
• Flexibility on down payment, and no reserves
• No limitations on income

27. For The Buyer
• Flexibility on credit and bankruptcy
• Flexibility on down payment, and no reserves
• No limitations on income
• Sellers can help up to 6%

28. For The Buyer
• Flexibility on credit and bankruptcy
• Flexibility on down payment, and no reserves
• No limitations on income
• Sellers can help up to 6%

29. For The Buyer
• Flexibility on credit and bankruptcy
• Flexibility on down payment, and no reserves
• No limitations on income
• Sellers can help up to 6%
• Always assumable

30. 203(k) Interesting Facts
• According to the National Association of Home Builders
Americans spent an estimated $215 billion on residential
remodeling in 2005.
– “1 out of every 2 existing homebuyers do major
improvements within 24 months of purchase.”

31. Benefits to Buyers!
• Purchase an existing property and finance the costs of
improvements to the property in one mortgage.
• Move an existing dwelling to a new location.
• Demolish an existing structure and rebuild.
• Refinance an existing mortgage and build in costs to make
improvements.
• Borrower has up to six (6) months to complete the repairs.

32. Features of the FHA 203(k)
• Fixed Rate mortgages for 15 and 30 year term.
– ARM mortgages available for 30 year term.
• Eligible properties are 1‐4 unit primary residences.
– Condominiums, PUDs, manufactured housing, leaseholds,
and mixed‐use properties.
• FHA area loan limits apply.
• Maximum LTV is based on the cost to acquire the property
plus rehab or 110% of the “as improved” value whichever is
less.
• Fully assumable mortgage.

33. What does a full 203(k) loan include?
• The mortgage amount includes:
• The cost of rehabilitation
– A minimum of $5,000 in eligible repairs is required.
• Up to six (6) mortgage payments during completion of construction
• Upfront Mortgage Insurance Premium
• 203(k) Consultant Fee
• Cost of Inspections, title updates and permit fees
– Money is released to contractor in draws as work is satisfactorily completed.
– Escrow is set up for the estimate of cost of materials and labor to complete
the rehabilitation, plus a 10% ‐ 20% contingency reserve.
• Escrow for repairs earns interest, payable to borrower

34. Potential 203(k) Buyers
• Buyers intending to purchase a fixer‐upper.
• Buyers who wants to make improvements.
• Buyers rebuilding a home damaged by fire or storm.
• Buyers that have a loan in process with repair issues that
must be corrected, but the seller is unwilling to fix.
• Buyers presently owning a home and want to refinance
current mortgage in order to do upgrades, home
improvements, or new appliances.

35. Streamline 203(k)
• No minimum amount of rehabilitation is required (per FHA
guidelines)
‐‐ investor guidelines require minimum of $5,000
– up to a maximum of $35,000 of eligible work items.
• Contractor estimates only.
• A 203(k) Consultant is not required.
• 2 Draws – 1 at time of servicing setup and final when all work
is complete

36. Streamline 203(k) – Eligible
Improvements
• Roofs
• Gutters
• Downspouts
• Existing HVAC systems
• Plumbing and electrical systems
• Existing flooring

37. Streamline 203(k) – Eligible
Improvements
• Minor remodeling such as kitchens
• Weatherization, including storm doors, windows, insulation,
weather stripping
• Appliances when at least $3,000 of basic home repairs are
involved

38. Streamline 203(k) – Eligible
Improvements
• Repair/Replacement/Upgrades which include:
– Improvements for accessibility for persons with disabilities
• Note:
• As long as the mortgagor uses the services of one or more
contractors to complete the repairs, this limited repair
program does not require a general contractor.

39. 203(k) & Streamline Comparison
FHA 203(k) Streamline 203(k)
• A minimum of $5,000 in • Minimum amount of $5,000
eligible repairs is required. rehabilitation is required.
• General Contractor required & • Contractor estimates only.
203(k) consultant utilized
• 2 Draws
• Money is released to
contractor in draws as work is • A 203(k) Consultant is not
satisfactorily completed – max required.
of 5 • No Mortgage Payments
• 6 months PITI may be included allowed
in the loan • No structural alterations or
• Structural repairs allowed landscaping

40. 203(k) – Eligible Property
• Owner‐occupied only
• 1 ‐ 4 units
• Must be 12 months old
• Condominiums, PUDs, leaseholds, mixed‐use properties
acceptable.
• Condominium improvements limited to the interior of the
unit.

42. Partner Focus

43. Partner Focus
• Academy Mortgage is a locally‐owned company providing
affordable financing and quality customer service
exclusively for buyers of Colorado real estate. Established
in 1995, we offer competitive rates, a broad selection of
mortgage products, and out‐front, first‐class service.

44. Partner Focus
• Academy Mortgage is a locally‐owned company providing
affordable financing and quality customer service
exclusively for buyers of Colorado real estate. Established
in 1995, we offer competitive rates, a broad selection of
mortgage products, and out‐front, first‐class service.
• #1 Private Lender in the United States

45. Partner Focus
• Academy Mortgage is a locally‐owned company providing
affordable financing and quality customer service
exclusively for buyers of Colorado real estate. Established
in 1995, we offer competitive rates, a broad selection of
mortgage products, and out‐front, first‐class service.
• #1 Private Lender in the United States

46. Learn more about the benefits of
the 203k program by visiting our
website at
http://www.yourrehabloan.com/