Des Plaines Mortgages: FHA 203K Limited Loans

If you’re Googling ‘Des Plaines mortgages’ to find out information about the FHA 203K Limited Loans (aka 203K Streamlined), you’ve come to the right place. Here’s all the information you need to know.

Des Plaines Mortgages
3-unit property on Ida, Des Plaines, IL 60016

Property Eligibility

The 203K Limited, being an FHA loan, can be used to repair 1-4-unit properties that at least one of the borrowers will occupy as their main residence. The 2-4-unit properties can be mixed-use properties as long as the residential space is 51% of the building and the commercial use does not interfere with the residential use.

Interested in other Chicago mortgages? Jumbos? Condo loans? No employment verification loan? Are you a first-time home buyer? Call me at 847-840-8884 or browse this site to get more information. If FHA 203k loans is what you want, read on or call me at 847-8408884.

Interested in other Chicago FHA loans?

I am your Des Plaines mortgage specialist because I used to in Des Plaines (On Jefferson Street, close to the Market Square), so I know Des Plaines and because I know mortgages.

Borrower Eligibility

The eligibility for borrowers is the same as for the main FHA loans.

  1. They must have a middle credit score of at least 500 or no credit scores. Though the FHA allows scores as low as 500, most lenders do not. Most do not go under 600, a few go to 580 and very few go lower. And, of course, lower credit scores mean higher interest rates. As regards no credit scores, people with no credit can show they are worth lending to with rent payments or phone and utility company bills.
  2. They must earn enough money to be able to repay the loan. FHA loans are more lenient when it comes to employment gaps than conventional loans are. Still, the borrower must show that they are likely to have the same income they are qualifying with.
  3. Borrowers must have at least 3.5% of the loan amount for the down payment (but it can be from gifts) or 3% of the loan amount in equity for rate and term refinancing (15% for cash-out refinances).
  4. They must have the closing costs and escrow funds. (Both for the down payment and the closing costs and escrows, that means the money has been in the borrower’s account(s) for at least 2 months or it came from a source the FHA finds acceptable, such as wages.

If you’re Googling Des Plaines mortgages because you want a renovation loan, call me at 847-840-8884 to discuss your options.

FHA 203K Loan in Des Plaines, IL

Des Plaines 203K Limited Mortgages: Specifics

  1. The minimum repairs money is $5,000.
  2. The maximum repairs money is $35,000.
  3. There is always a 10% contingency. That means that materials, labor and fees can cost only $31,500.
  4. The $35,000 includes all costs. That means permit fees and the contingency reserves money are counted too).
  5. If you request it, half of the repairs amount can be disbursed when you close the loan. If you do not request it, the whole amount will be disbursed once all the work is done.
  6. You (your contractor) have 6 months from the closing to finish the work.
  7. You will get reimbursed only for repairs that are listed on the contractor’s bid that the lender accepted.
  8. Anything that the appraiser says needs to be repaired must be repaired. Even if you’d rather spend the money on remodeling something else.
  9. You cannot repair or add luxury items (say, a pool).
  10. You can use luxury materials (the most expensive granite you can find, for instance).
  11. You can do the work yourself, if you have a proven record of doing that. I mean, if you’re a plumber, you can do your own plumbing; if you’re a roofer, you can do your own roofer, if you’re a general contractor, you can do everything. The lender, however, will only reimburse you for materials and fees, not for labor.
  12. You can not do any repairs / remodeling that alters anything structural. If you want to do structural changes, you must switch your loan to the Standard 203K loan. Or get a conventional renovation loan.
  13. Your contractor must submit a bid that breaks down the costs by labor and materials. And there must be a sufficiently detailed description of the work to be done. Something like: painting $3,400 will not do. Something like this: Paint the 2nd floor kitchen, dining room and bedrooms; 6-gallons semi gloss paint, labor $3,050, materials $3050, total $3,400 is better.
  14. The repair funds and the mortgage loan together cannot exceed FHA’s limit for the type of property for Cook County. You can check the limit here.

If you’re Googling Des Plaines mortgages because you want a renovation loan, call me at 847-840-8884 to discuss your options.

Interested in other Chicago mortgages? Jumbos? Condo loans? No employment verification loan? Are you a first-time home buyer? Call me at 847-840-8884 or browse this site to get more information.