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Eligible Properties & Loan Limits
Eligible Properties
To be eligible, the property must be a one- to four-family dwelling that has been completed for at least one year. The number of units on the site must be acceptable according to the provisions of local zoning requirements. All newly constructed units must be attached to the existing dwelling. Cooperative units are not eligible.
Homes that have been demolished, or will be razed as part of the rehabilitation work, are eligible provided some of the existing foundation system remains in place.
In addition to typical home rehabilitation projects, this program can be used to convert a one-family dwelling to a two-, three-, or four-family dwelling. An existing multi-unit dwelling could be decreased to a one- to four-family unit.
An existing house (or modular unit) on another site can be moved onto the mortgaged property; however, release of loan proceeds for the existing structure on the non-mortgaged property is not allowed until the new foundation has been properly inspected and the dwelling has been properly placed and secured to the new foundation.
A Remodel/Renovation mortgage may be originated on a "mixed use" residential property provided: (1) The property has no greater than 25 percent (for a one story building); 33 percent (for a three story building); and 49 percent (for a two story building) of its floor area used for commercial (storefront) purposes; (2) the commercial use will not affect the health and safety of the occupants of the residential property; and (3) the rehabilitation funds will only be used for the residential functions of the dwelling and areas used to access the residential part of the property.
Condominium Unit
The Department also permits Remodel/Renovation mortgages to be used for individual units in condominium projects that have been approved by FHA, the Department of Veterans Affairs, or are acceptable to FNMA under the guidelines listed below.
The Remodel/Renovation program was not intended to be a project mortgage insurance program, as large scale development has considerably more risk than individual single-family mortgage insurance. Therefore, condominium rehabilitation is subject to the following conditions:
After rehabilitation is complete, the individual buildings within the condominium must not contain more than four units. By law, Remodel/Renovation loans can only be used to rehabilitate units in one-to-four unit structures. However, this does not mean that the condominium project, as a whole, can only have four units or that all individual structures must be detached.
Example: A project might consist of six buildings each containing four units, for a total of 24 units in the project and, thus, be eligible for Remodel/Renovation loans. Likewise, a project could contain a row of more than four attached townhouses and be eligible for Remodel/Renovation because HUD considers each townhouse as one structure, provided each unit is separated by a 1 1/2 hour firewall (from foundation up to the roof).
Similar to a project with a condominium unit with a mortgage insured under Section 234(c) of the National Housing Act, the condominium project must be approved by HUD prior to the closing of any individual mortgages on the condominium units.
Ineligible Properties
* Second Home
* Investment Property
* Co-op
* Mobile home
* Condo/PUD Hotel
* Spec Homes
* Properties subject to HUD restrictions on “Flipping” per Mortgagee letter per Mortgagee letter 03-07 and as updated in ML 05-05, ML 06-14
* Properties eligible under section 223(e)
* Sub-Leaseholds
* Conversions
* Mixed-use properties under Remodel/Renovation Streamline program
FHA Loan Limits
The CY2009 basic standard mortgage limits for FHA insured loans are:
One-family Two-family Three-family Four-family
$271,050.00 $347,000.00 $419,425.00 $521,250.00
These mortgage limits represent only the standard mortgage limits for 2009. Certain metropolitan area (MSA's) will qualify for higher loan limits. If you feel that your MSA might qualify for a higher loan amount please contact your loan originator for assistance. |
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