FHA Updates 203(k) Rehabilitation Mortgage Loan Program

HUD recently published Mortgagee Letter 2024-13 (ML) updating several facets of its 203(k) Rehabilitation Mortgage Loan Program.  With the changes, FHA aims to make it easier for Mortgagees to originate, and for borrowers to complete, needed or desired rehabilitation of their homes.

Among other changes, the ML increases the allowable total rehabilitation costs a borrower can finance under the Limited 203(k) program from $35,000 to $75,000 and extends the rehabilitation period to 12 months for the Standard 203(k) program and nine months for the Limited 203(k) program.  The ML also permits the inclusion of the consultant fee in the mortgage amount under the Limited 203(k) program and increases allowable consultant fees.  In addition, the ML increases the number of days from 15 to 30 that a repair can prevent a borrower from occupying the property before FHA considers the repair major.