203k Loan on a Functionally Obsolete Property

203(k) Renovation Loan on a Functionally Obsolete Property

Example of 203(k) Renovation Loan

This is an example of an FHA 203(k) Renovation Loan on a functionally obsolete home that was a 3 bedroom and 1 bath house. This property was improved to become a 3 bedroom, 2 bath home using a 203(k) loan.  This home resulted in a 1100 square feet of living space, added a great room, an additional bathroom, and a garage.  The tree was also removed with the funds from the renovation loan.

Details of Monthly Payments Added to the Loan Amount

While this property was under renovation, all of the monthly payments were financed into the loan amount.  Therefore, no monthly payments were needed while the contractor completed the necessary and desired repairs on the subject property. Thus, the borrower did not need to make two payments (one for the current living arrangement, and the other on the subject property).  The payments were added to the loan amount for a period of 6 months, while completing the property, then the borrowers began making payments on their own, consistent with the loan terms.

Family Stability

This was grandfather’s house, that his granddaughter purchased after he died.  There was lots of deferred maintenance that was corrected with the renovation of this property.  The granddaughter grew up in this neighborhood, knew all of the neighbors, and wanted to raise her family in a known environment.  This was an affordable option for the family to achieve their dreams of desired neighborhood with a home that worked for their family.


The future value appraisal supported all of the repair, maintenance, and expansion costs on this property.  The final down payment was 3.5% of the acquisition on this property.  This property value increased because of the repairs, upgrades, and modifications completed on this property.  It would have cost more to purchase a comparable property in the current neighborhood. A FHA home improvement loan can be the perfect solution for those looking to purchase a fixer-upper and upgrade the home.

Final Outcome

The family was able to move into their desired neighborhood, affordably, and live among their peers.  They are overjoyed with their financial and lifestyle decision.

Have Questions?

Please call me to discuss any questions you may have in regards to your renovation project.

Related Articles

We’ve all been there: you’re enjoying one of your favorite home renovation shows wondering how you can have the updated features of your dreams at a price you can afford. As the nation’s number one renovation lender, we’re here to turn your dreams into a reality. Whether it’s your first…
Read More of the post DIY – Home Renovation with Homebridge

  For the second year in a row, the Department of Housing and Urban Development’s (HUD) endorsement summary report has Homebridge ranked as the #1 203(k) renovation lender of the year. Setting the standard, Homebridge reported 954 endorsed 203(k) renovation loans in the 2018 fiscal year. That’s 87% more 203(k)…
Read More of the post Homebridge Ranks No. 1 in 203(k) for 2018, According to HUD

In fact, Florida is now considered a sellers’ market with increasing price points and an inventory of homes for sale that is at its lowest level in years. Homes that have been recently updated and remodeled are in high demand  and It is not unusual to see potential buyers enter…
Read More of the post FHA 203K Rehabilitation Loan

A 203(k) consultant is like a football team’s offensive coordinator – a point guard that runs plays on a basketball court and a star infielder – all in one. Seem like an exaggeration? When it comes to 203(k) consultants the comparison is accurate: these professionals really can be the most…
Read More of the post What Does a 203K Consultant Do and Why Do I Need One?