FHA 203K loans require a little more coordination than a traditional loan would. In order to ensure we have a closing that is as smooth as possible and ON TIME I have created this post to guide Realtors on how you can us assist us AND your clients in getting our FHA 203K loans closed.

1.) Purchase Contract – Needs to indicate FHA 203K financing and needs to provide at least 45 days to close. We need contingencies that are slightly longer than normal so we can get the inspection AND the contractor bids.

2.) Utilities — ALL utilities need to be on at the time of home inspection AND appraisal. Get them on and leave them on until we have an appraisal that indicates functioning systems. Why? Because when a foreclosed / vacant house sits, and the systems are inactive for an extended period of time, they tend to break. For a home to be FHA approvable we need functioning systems. With a 203K we can correct any issues with plumbing, electrical or HVAC, but we need to know if they are broken or not. Therefore, we need utilities ON. If utilities cannot be turned on we can still work with it, but we’ll add between 10-20% in contingency reserve on top of the renovation escrow account.

3.) Inspections – Beside your home inspection, which should be standard on any purchase, FHA 203K loans may require additional inspections if the purchase contract or pre-existing conditions call for them. If the house is vacant for more than 30 days and is on septic then we need a septic inspection. If the purchase contract calls for a termite inspection then we need the termite letter. Be aware that depending on property condition additional inspections may be required. On full 203K loans (loans with more than $35,000 in renovation OR any renovations that are structural) you will be required to pay for a HUD Consultant to inspect the property and review the contractor proposal.