Pennsylvania Rehab,
Renovation
Loans. Purchase and rehab, renovate, or refinance and rehab. FHA 203k loan tips.
PA Rehab Loan Purpose:
Addition, upgrade kitchen, appliances, energy improvements, Solar
Power, Moving a home to a new location, Tear downs, Lead
Based Paint removal, Structural Changes, converting multi unit to 1
unit, converting 1 unit to multi unit, new Carpet, Paint, etc.
Rehab Loan Rates: The interest
rate on a PA rehabilitation loan averages .5% above
the interest rate for an existing purchase loan. The
same rate is paid during the rehab phase and continues for 15 to 30
years, whichever the borrower prefers.
$125,000 minimum loan amount.
Availability - every county in
PA (Philadelphia, Allegheny, Lehigh, York, Northampton, Lancaster,
Dauphin, Monroe, etc)
Pennsylvania Rehab Loan Maximum Loan
Amount ($1,000,000 maximum loan amount)
$417,000 – 1 Family
$533,850 – 2 Family
$645,300 – 3 Family
$801,950
– 4 Family
Jumbo 203k loans are also
available to $1,000,000 on 1 unit.
Eligible Property and Occupancy
Types
The following
Pennsylvania property types are eligible:
·
1-4 unit primary residences
·
Log homes
·
Modular homes
·
FNMA eligible Condominiums
and PUDs
Financing
mortgage Payments: If after closing the property will be
uninhabitable, a borrower may roll in up to 5 mortgage payments into
the loan amount. This way, no monthly mortgage payments are
required during the time the borrower needs to live elsewhere.
Maximum Loan-to-Value
Purchase and Limited Cash-out
Refinances for Pennsylvania 203k Rehab Loan
|
|
Maximum LTV |
Maximum CLTV |
|
1-4 Unit Primary purchase with
rehab |
96.5% |
103% |
|
1-4 Unit Primary refinance with
rehab |
97.75% |
103% |
Minimum FICO score = 620. Credit scores above 740 receive a
discount of 1 point (1% of loan amount) off of closing costs.
LTV Calculation:
Loan amount divided by the lesser of:
“As-completed” value, or
Purchase price +
rehabilitation cost + allowable closing costs.
The mortgage amount may include the
amount required to satisfy the existing first mortgage, the
amount required to satisfy any outstanding subordinate mortgage
liens, closing costs (including prepaids), points, and the total
renovation costs (including allowable construction-related
costs) for the home improvements.
The borrower is
NOT allowed to receive the lesser of $2,000 or 2% of the loan
amount in cash back at closing.
LTV Calculation -
Loan amount divided by the lesser of:
110% of “As Completed”
value, or,
"As-is" value plus all renovation costs.
Forms required for PA 203k Rehabilitation loan
203k Loan Fees:
Borrower Paid Mortgage Insurance
|
Upfront MIP |
|
Loan type |
MIP |
|
Purchase & Refinances |
1.75% |
Consultant Fee:
The fee charged by the consultant can
be included in the mortgage. A fee of $400 is acceptable for a
property with repairs less than $7,500; $500 for repairs between
$7,501 and $15,000; $600 for repairs between $ 15,001 and $ 30,000;
and $ 700 for repairs between $30,001 and $50,000; $800 for repairs
between $50,001 and $75,000; $900 for repairs between $75,001 and
$100,000; and $ 1,000 for repairs over $100,000. An additional fee
of $25 can be charged for each additional unit in the property under
the same FHA case number. For this fee, the consultant would inspect
the property and provide all the required architectural exhibits.
Supplemental Origination Fee:
1.5% of construction amount
Origination Fee: Averages 1-2%
(points) of loan amount
Prepayment Penalty: None
Eligible improvements
There is only a $5,000 minimum amount of repairs
required on a PA 203k rehabilitation loan. Any repair is acceptable as long
as it is supported in the “after-improved” value. The project is
looked at in its entirety as opposed to a line-by-line comparison of
contribution to value. The following is a list of suggested repairs:
• Structural repairs and
alterations. (Also includes additions to the structure.)
• Improvement in the
functionality or modernization. Includes updating kitchens and
bathrooms.
• Changes for aesthetic appeal
and the elimination of obsolescence.
• New exterior siding and new
doors.
• Repair or replacement of
plumbing, heat, air conditioning or electrical. Installation of
new plumbing fixtures is
acceptable, including interior
whirlpool bathtubs.
• Installation of well and/or
septic system. Must be installed or repaired prior to beginning
any other repairs to the
property.
• Move an existing house onto
another site
• Replacement of flooring,
carpeting or tile.
• Energy conservation improvement.
New double pane windows and doors, storm windows, insulation,
solar
domestic hot water systems.
• Major landscape work and site
improvement.
• Improvements for easier
accessibility to the handicapped.
• New stoves, refrigerators and
other free-standing appliances.
• Painting and other cosmetic
repairs.
• New swimming pool or deck.
•
Solar Energy Increase. The mortgage is eligible for an increase
of up to 20 percent in the maximum insurable mortgage amount if
such an increase is necessary for the installation of solar
energy equipment.
NOTE:
Items that will not become a
permanent part of the property are not eligible.
Approved contractors can do the work:
• Experience
• Resume
• Client references
• Insurance
Self -Help
Self help is not
permitted at this time. All work must be included in the
contract with an insured, non-related General Contractor.
Other
A
Contingency Reserve equal to 10%-15% of the cost of the
rehabilitation is required.
All rehab
funds, including contingency reserve, are place in the escrow.
Unused
contingency funds must be applied to reduce the balance of the
mortgage unless the contingency reserve was provided from the
borrower’s own funds; or the borrower may elect to pay for any
additional elective repairs or improvements to the property
(personal property purchases, repairs, or improvements are not
allowed).
The work must begin within 30 days of
execution of the Agreement. The work must not cease prior to
completion for more than 30 consecutive days. The work is to be
completed within the time period shown in the Agreement (not to
exceed six months); the lender should not allow a time period longer
than that required to complete the work.
No work may begin
until AFTER closing.
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