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3 Basic Differences Between a Standard and Limited FHA 203(k) Home Loan

person installing windowYou've found a home in a neighborhood where you've always wanted to live. And you can snatch it up at a good price. So what's stopping you?


Could it be the outdated appliances, dark brown exterior,  and wall-to-wall carpeting? It might not be your dream home just yet, but with an FHA 203(k) renovation loan, it could be. With this loan you can purchase the property and get the extra funds you need to remodel, repair, and renovate. It's unique because you can borrow the funds you'll need based on what your house is expected to be worth after the renovation is complete. 

(The 203(k) can also be used to refinance your current home and make renovations.)


The FHA 203(k) loan is insured by the Federal Housing Administration (FHA), and offers two options: Limited and Standard. Finding the one that's right for you depends on how much you want to spend and what you intend to do. 



3 Differences between the Limited 203(k) and the Standard 203(k)

  1. Structural Repairs.
    LIMITED:  Minor remodeling and non-structural repairs.

    STANDARD:  Major rehabilitation or when repairs are structural or involve landscaping. Examples include jacking up your house to replace the sill plate or knocking the house down to rebuild it (you must leave the foundation). 
  2. HUD Consultant.
    LIMITED: Does not require a HUD consultant.

    STANDARD: Requires the use of a HUD consultant. He will draw up the paperwork and work with you and your contractors to get a write-up before the appraisal and ensure the required renovation is completed. (Your loan officer can work with you to obtain the services of an experienced HUD-approved 203(k) consultant).
  3. Cost.
    LIMITED:  Total renovation costs cannot exceed $35,000. There are no minimum costs.

    STANDARD: Your repairs and renovations can go above $35,000. There is a  minimum repair cost of $5,000. 

Eligible repairs you can make with a Limited 203(k)

  • Repairing or replacing the roof, gutters or downspouts
  • Repairing or replacing HVAC, heating, plumbing, or electrical systems
  • Repairing or replacing flooring
  • Minor remodeling
  • Indoor or outdoor painting
  • Replacing appliances
  • Accessibility upgrades
  • Abatement of lead-based paint
  • Repairing or replacing decks, patios, and porches
  • Waterproofing or finishing a basement
  • Weatherization

Eligible repairs you can make with a Standard 203(k)

  • Plumbing, electrical, heating, and cooling improvements
  • Structural changes
  • Storm shelter additions
  • Appliance and HVAC upgrades
  • Roofing alterations
  • Large landscaping and site improvements
  • Sewage and septic improvements
  • Site conversion (from a single unit to multi-unit property, for example)
  • Site relocation
  • Accessibility upgrades

Of course, there are other nuances that differentiate the Standard from the Limited. If you have more questions, or want something concrete in your hands, download our free eBook guide loaded with 203(k) loan information.


Ultimate Guide to Renovation Loans


Amerifirst is ranked as one of the top twenty FHA 203(k) lenders in the nation for 2020 by the Department of Housing & Urban Development.   


*This is not a commitment to lend. Not all borrowers will qualify; contact us for more information on fees and terms.


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5 Reasons Not to Skip Your Home Inspection

You found a house you love—hooray! But with lots of other buyers breathing down your neck, you feel like you need to act fast. To make your offer more attractive to the seller, you might be tempted to skip your home inspection, but here are five good reasons not to! 1.) Not all problems are obvious. It’s easy to spot issues like a crack in the sink or a broken light fixture. But do you know how to recognize foundation problems, termite infestations, outdated wiring, or sewer system problems? Trained home inspectors do and taking the time to have them go over the entire property before you sign the papers can prevent you from buying a headache instead of a home. BOTTOM LINE: The great thing about an inspection is that if you see major problems you’re unwilling to take on, you can change your mind and walk away. 2.) You may not be able to afford the repairs. If you’re like many new homeowners, you may not have much set aside to pay for needed repairs after saving up for your down payment and closing costs. While you may not mind waiting a bit to repaint or update appliances, waiting on problems like leaky roofs, broken plumbing, or infestations will only make them worse, and some issues, like broken furnaces, may need to be repaired right away. BOTTON LINE: You don’t want to go deep into debt to keep your home safe and comfortable. Instead, it’s worth negotiating with the seller to pay for repairs. If they refuse, you can simply walk away. 3. Some problems can make it harder to insure the home. Getting home insurance is essential because lenders need to see an insurance policy before you can close on your home—and of course, you’ll want to have your home protected in case anything goes wrong. However, some companies may decide that your home’s older electrical systems, plumbing, or building materials make it too risky to insure. BOTTON LINE: If essential updates are needed, the only choices are to ask the seller to pay for them, pay for them yourself if you can afford it, or walk away from the deal. 4. Serious issues can affect the resale value of the home. Your home is probably the biggest investment you will ever make. However, if it has major problems, instead of building your wealth, it could turn into a lousy investment that threatens your financial well-being. BOTTON LINE: While a home inspection typically costs a few hundred dollars, it’s an excellent investment in your peace of mind and financial health. 5. Some problems can threaten your family’s health or even your life. This sounds scary, but it’s no exaggeration. Issues like lead paint, black mold, radon (an odorless radioactive gas), or carbon monoxide leaks can cause serious and sometimes fatal health problems. BOTTON LINE: These issues are also easy to miss without a professional home inspection, and it’s simply not worth taking the risk. While it’s not easy to compete with other buyers who are bidding for the house you want, home inspections are one area where you don’t want to cut corners. To protect your physical, financial, and mental health, there’s no substitute for a professional home inspection.

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Let's Talk FHA Loans

  If apartment living is getting old, or you've outgrown your parents' basement and house rules, you may be thinking about buying your own place. For this reason, you may be interested in learning about home loans that offer low and no-down payment options and have flexible lending requirements. One of these is the FHA loan. Let's take a closer look. 


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