The limited 203Ks (the streamline version) is for repairs of $30,000 or less and cannot include any type of structural repair or improvement.
All the details of a Limited 203K loan:
1) For purchases, you must execute a 203K addendum (signed by borrower and seller as part of sales agreement)
2) Borrower must write up a “Work Plan” which is a statement of intent (itemizing what is to be done for rehab) and sign it. The other program disclosures the borrower must sign are found in this link.
3) you must use a contractor or up to 3 contractors for all the work (subcontractors hired by a contractor do not count toward the three maximum contractors you can hire).
4) each contractor must give a detailed line item proposal for labor and materials (must break down a dollar amount for labor and material for each item) . The proposal must reference the borrower’s name and the property address. It must have the contractor’s contact info (name, address & phone #) and it must be signed by both the contractor and borrower(s). If any licensed subcontractors are required (electrician or plumber for example) then the contractor must also name them on his proposal.
5) contractor(s) must complete the contractor profile sheet and give references – we will check the references! Subcontractors of a contractor due not need to do all the paperwork (but they do need to provide proof of insurance)
6) contractor must sign the other contractor paperwork for the program.
7) contractor must provide proof of liability insurance ($500,000 minimum) and his/her agent must provide a certificate naming you and the property as an additional insured.
8)each sub-contractor must provide proof of liability insurance ($500,000 minimum) and his/her agent must provide a certificate naming you and the property as an additional insured.
9) the permit form must be completed by the town
10) if you want a disbursement of funds at closing (35% max) you need to have permits in place and the disbursement request form must be signed by the contractor.
After all of the contractor’s paperwork is submitted, the construction manager will review. It is common for there to be requests to modify the proposals.
After the proposals are finalized, we can order the appraisal. It is common for the appraiser to add additional requirements and then the contractor has to modify his/her proposal(s) to include the additional requirements of the appraiser.
NH Housing also offers and FHA 203K rehab loan. It is mostly the same but a little different. Click this link to the NH Housing 203K rehab loan. Click this link to get to the full 203K details
I am there throughout the process to guide you along.