FHA 203k Contractor Loan Process

How the 203k Contractor Loan Process works in the Chicago Area

What you need to know when selecting a 203k contractor

When a home buyer wants to purchase a property that is in need of repairs or updates, the home buyer usually must first obtain financing to purchase the home and then additional financing to complete the repairs. They must then obtain a permanent mortgage after the repair work has been completed. Throughout the Chicagoland area there are a large number of homes being offered through foreclosure or short sales which are normally at a substantial savings to those that are in move-in condition. There are also homes in well-established neighborhoods that are being competitively sold due to the fact that many of them are in need of some sort of renovation. All of these houses, whether from foreclosure or neglect, can be benefit from the 203k loan program.

There are two types of 203k loans:

The Standard 203k Loan is for projects that have renovations costs exceeding $35,000. They are normally more complicated projects that involve structural changes, exterior landscaping, or major renovations. The Standard 203(k) is also used if your project requires architectural exhibits.

The Streamline 203k Loan is designed for projects with renovations costs that are less than $35,000. These projects normally are not nearly as extensive and don’t require a consultant or architect, therefore can be processed and approved faster.

The 1, 2, 3s, of 203k

1 - Find your team of 203k specialists who can help guide you through the process. If you are reading this you have started in the right spot as we can help point you in the right direction of a lender who is well versed in the 203k loan process

2 - Locate your new home. Again, if you are looking for a good partner we would be glad to point in you the right direction. If you have a realtor already that is great too.

3 - Once the property has been identified you will want to contact Tier Construction so that we can help you determined what the scope of work will be desired and required. This would also be the time to get the consultant involved, which we can also help you with if you need assistance finding one.

4 - All documentation is submitted to the lender so that the lender can prepare all of the required items that will allow the property to close

5 - On final approval, your loan will close and the improvement funds are place in escrow.

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