Here is what makes a house qualify for a 203K home loan.

What makes a house qualify for a 203K loan?

Keep in mind you can not get a 203K loan on an investment property, it must be for your primary residence. So the first rule of thumb is it must be a home you would like to live in.

Guidelines are not based on how much work a home needs or doesn't need but more so based on what type of property it is. You can get a 203K loan on a single family home, duplex, triplex or even a fourplex as long as you are going to live in one of the units.

Guidelines also include financing on mixed use properties with commercial and residential both used in a particular building.

Individual condo units are able to receive 203K financing as well.

The Department of Housing and Urban Development (HUD) says, 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. Cooperative units are not eligible.

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.

In addition to typical home rehabilitation projects, this program can be used to convert a one-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 (or modular unit) on another site can be moved onto the mortgaged property; however, release of loan proceeds for the existing structure on the non-mortgaged property is not allowed until the new foundation has been properly inspected and the dwelling has been properly placed and secured to the new foundation.

A 203(k) 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 (storefront) 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.

Simply put, if you are planning on living in your new home and it has less than four units it probably will qualify for a 203K home loan.

If you would like more information about a 203K loan or would like to know how to get the process started, call Dawn Workman with Veracity Real Estate Group. She is a 203K Specialist and is able to help you with the entire process.

Dawn Workman, MBA, Realtor, 203K Specialist

480-540-8100

See all the Phoenix, AZ area foreclosures here!