web analytics

203k Refinance Loan Guidelines

The 203(K) lending guidelines allow the refinancing of a home bought with cash within six months from the date of acquisition. For borrowers in this scenario, the guidelines allow a 203(K) lender to underwrite the loan as if it is a purchase transaction.

In order to qualify, any proof regarding interim financing is not required. The lender also accepts the sales contract and HUD-1 settlement statement as proof to establish the “as-is” value and the date of closing.

This provision in the 203(K) refinance guidelines allow a borrower to also receive cash back from the closing, after allowing for the down payment and closing costs. Due to this flexibility, a home buyer can quickly close on his initial purchase using cash and then can use the 203(K) program to refinance to receive the cash back, while also securing funds needed to perform the repair work.

The entire process involved in this type of scenario is entirely similar to the 203(K) loan purchase process. The qualifying ratios and underwriting are also done similarly.

This type of transaction is only allowed on residential properties for borrowers who plan to occupy the dwelling as their primary residence. Investors and second home buyers do not qualify.

The 203k streamline refinance allows home owners to tap the FHA loan program to perform repairs and rehab work on their residential homes. The maximum loan allowed on for a streamline 203k loan is $35,000. There is no minimum loan amount requirement to qualify. Before the new streamline refinance guidelines, the minimum loan amount needed to be eligible was $5,000.

A standard 203k rehab mortgage for refinancing can be used to renovate any residential property that meets the property eligibility requirements. Single-family homes and other residential multi-unit properties can be financed through the 203k refinance loan.