The FHA 203K loan in NC lets you purchase or refinance and rehabilitate a property with one loan closing. The projected rehabilitation costs are held in an escrow account and disbursed as work is completed and inspected. The loan amount is based on the projected market value of the property when all repairs are completed.

What Are the Benefits of 203K Loans in NC?

  • Properties that are sold “as-is” often would not qualify for a standard FHA loan. However, 203K loans are designed to improve, update and modernize the home.
  • The loan enables you to purchase foreclosure properties that require repairs. Most HUD Foreclosure properties could benefit t from a 203K loan.
  • You can purchase a home that does not require repairs and finance the cost of “modernization” or cosmetic repairs. (See eligible improvements.)
  • The loan allows for 1-4 unit dwellings, including condominiums.
  • Where zoning allows, a 203K loan can be used to convert a single family dwelling to 2-4 units and vice versa. (See eligible properties.)
  • Up to 110% (100% on condominiums) of the “as-is” value of the home may be used as basis for mortgage calculations. (The appropriate LTV factor is then applied.)
  • Up to six months of PITI (principal, interest, tax and insurance) payments can be financed to assist those who would otherwise be required to make double-housing payments. (Consultant K only)
  • Buyers who purchased a property with cash can use the 203K program to complete repairs/modernization and replenish funds used at the time of purchase.
  • The loan can be used for complete reconstruction of a home on its original foundation.
  • Properties in “below-average” condition can be upgraded through repairs and maintenance (i.e., new roof, fix broken windows, and lead paint abatement). Increase square footage by building an addition, building a second floor or finishing a basement or attic space. (Consultant K only.)

*Tip: house must be one year old to be considered for a renovation.

What Is the Difference Between a Streamline K and a Consultant K Loan?

The renovation can be completed under either a Streamline K loan or a Consultant K program. Choosing which loan suits you best will depend on the amount and type of improvements your property needs.

Streamline K: The Streamline K program is for homes needing limited repairs and requiring relatively little expertise to manage. The distinguishing feature of the Streamline 203K is that there is no consultant managing the project with multiple draws.

Instead, this program is primarily designed for a “streamlined” project where the home can be occupied immediately after closing, and the contractor will receive one draw in the amount of 50% of the total contract and the final payment at completion. It has no minimum repair costs but has a cap of $35,000 (including rehabilitation fees).

Consultant K: The Consultant K is typically used for homes that need repairs in excess of $35,000 or require structural repairs. There must be at least $5,000 worth of repairs, and loan limits are based on property type and location. The Consultant K program allows for more extensive work to be done, and requires more supervision throughout the process.