INELIGIBLE 203(K) BORROWERS AND HOMES

 

The following characteristics and participants are ineligible for the FHA 203(k):

 

1. No investment properties are allowed
2. No 2^nd home properties are allowed
3. No “Stated Income” loan
4. No five or more unit buildings are allowed, unless final product will be a properly zoned 1-4 unit, owner occupied property.
5. No “Zero-Down” loan option, unless the seller is will to participate with an FHA approved “Down Payment Assistance Program”.  The property’s value must support the amount of the assistance being requested.
6. No properties that are owned by the seller for less than 90 days are allowed. Homes owned by the seller for 90 days to one year, require a second appraisal at the sellers expense.
7. No chapter 7 bankruptcies are allowed that are less than one year old.  Guidelines state a two period since the bankruptcy discharge, with no late payments on the credit report during that time.  Bankruptcies between one and two years, and late payments since the bankruptcy may be allowed if it is determined to be caused from extenuating circumstances (e.g…death in the family, job loss, personal tragedy, health issue, etc…) Overall credit for the past 12 months must have been current, exceptions are possible.
8. No “Single-Wide” properties are allowed.
9. No “New-Construction” close outs allowed, at some point the local municipality would have had issued a “Certificate of Occupancy”.
10. No luxury items, such as swimming pools, are allowed.  However, up to $1,500 can be used toward the repairs of an existing swimming pool.
11. No upfront monies released for repairs prior to being fully installed.  However special order items, such as cabinets, can be paid for prior to installation.