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FHA 203k Loan in St. Johns County, Florida

For most Americans, buying a house will be the biggest purchase they make in their lives, and their home will most likely be their most valuable asset for the rest of their days. Even so, people often need to change their properties, especially after living in one residence.

The reason might be a growing family's increasing need for space. A house may also begin to break down gradually due to the passing of many years.

The urge for a change may also result from the simple fact that homes can quickly become old-fashioned as new trends, technologies, and conveniences appear.

Whatever the reason, it's essential to know that moving to an entirely different house is not the only solution on the table.


FHA 203k Loans

203k Renovation Mortgage Loans are a form of home refinancing or financing that allow borrowers to combine the expenses they incur carrying out renovations and their real estate purchase expenses into a single mortgage.

They are backed by the Federal Housing Administration, which is a government program aimed at helping Americans access financing for home purchases. The loans can either be taken on as adjustable-rate mortgages or as either 15-year or 30-year fixed-rate mortgages.

These loans are preferred over conventional loans because they typically offer more lenient or convenient terms and requirements, making them significantly more affordable for the average borrower.

A critical stipulation of 203k loans is that any renovation work must be started within 30 days of closing. These works must be completed within six months of closing.


What Renovations are Covered by FHA 203k Loans?

Two basic categories of 203k loans are available to us, each with its characteristics, restrictions, and practical uses. These include:


Limited/Streamline 203k Loans

This loan type is applied in cases where a hose only requires cosmetic or non-structural work done. The total budget for these renovations should not exceed $35,000, and there is no minimum limit.

Even though you would not be required to have a HUD consultant (an agent of the U.S. Department of Housing and Urban Development) with you, you will have to complete and submit a written work plan to demonstrate that you fully understand your contractor's bid before closing. This loan cannot be used to cover mortgage payments.


Limited loans can be used to cover a variety of jobs, including:

  • Replacing the home's windows so that its energy efficiency rating improves

  • Refinishing existing flooring

  • Replacing the countertops in the bath and kitchen areas

  • Roof Repair

  • Internal and external paintwork

  • Replacing the showers and tubs in the home

  • The addition of downspouts and gutters

  • Septic tank repairs

  • Siding replacements

  • Updating the electrical systems, plumbing systems, and the HVAC systems

Standard 203k Loans

These loans are generally set up to facilitate renovations in properties that require structural work, including non-safety-related landscaping work, or where the renovation cost does not exceed $35,000.

The minimum value of this type of loan is pegged at $5,000, but there is no hard upper limit on the amount you can borrow, although the general FHA limits apply.

In addition to having a qualified contractor before applying, you will also be required to have a HUD consultant. The role of the HUD consultant will be to ensure that the minimum property standards are adhered to. They will also check to confirm that all the work is completed according to the terms of the contract.


According to FHA guidelines, this loan may cover renovations and improvements such as:

  • Increasing the size of the windows in a house to increase the amount of light coming in is considered a desirable feature

  • The completion of a basement or attic

  • The correction of existing foundational issues

  • Knocking down structural walls to help open up the property's floor plan

  • Putting in retaining walls to help mitigate the risk of flooding

  • Carrying out repairs on a pool

  • Expanding the kitchen area so that it extends into the dining room

  • Increasing the home's square footage by making structural additions

  • Putting in a detached garage where one did not exist before

The Loan Eligibility Requirements for 203k Renovation Loans in St. Johns County, Florida

As with any loan facility, 203k Renovation loans come with conditions and restrictions. These guidelines are designed to protect both the lender and the borrower from getting into a contract they might not be able to fulfill.

By helping minimize the chances of default, you will be protected from potential foreclosure, which can be a disastrous event. These eligibility requirements include:


Loan Limit Guidelines

FHA programs have a set upper limit on the amount a borrower can take on as a loan. Even though individual states, counties,s and residential zones might have slight differences in their upper loan limits.


Loan-to–Value Ratio

Loan-to-Value (LTV) ratios are a significant factor when lenders try to determine the loan amount for a borrower. To arrive at this ratio, we divide the mortgage amount by the Appraised Property Value or the Purchase Price. Lenders use the lesser of the two values where residential properties are concerned.

If, for example, you wish to take out a 203k loan on a property valued at $200,000 and qualify for a 96.5 percent LTV, then you will be required to pay a down payment of $7,000. The lender will provide you with a mortgage loan of $193,000.

LTV is also essential in determining the amount of Mortgage Insurance you will have to pay. With conventional loan programs, borrowers with more than an 80 percent LTV will be required to pay this insurance charge to protect the lender from the risk of default.


Minimum Credit Score

Your credit score is one of the lenders' most valuable tools when deciding whether to lend you money. A healthy credit score shows that you are fiscally responsible and can be trusted to honor your loan repayment obligations.

Where 203k loans are concerned, FHA guidelines stipulate that borrowers must have a credit score of at least 500, even though the final decision will rest with individual lenders.

Generally speaking, the higher your credit score, the lower the interest rates you will be charged on your loan. It is vital to ensure that your credit history is accurate before approaching lenders for a loan.

Look out for errors in your report and have them corrected in advance, as this might save you significant amounts of money in the long run.


Debt-to-Income Ratio

Debt-to-Income ratios (DTIs) are arrived at by taking a borrower's debt and dividing it by their income to help determine how much additional debt a borrower can comfortably take on.

If you make $2,000 each month and have a debt burden of $500 each, your DTI will be calculated as 500/2,000 = 0.25. This is expressed as a percentage, which would make it 25%.

The type of debt we are talking about here refers to obligations such as a mortgage, student, motor vehicle, credit card, etc. These calculations do not consider incidentals and utilities such as gym memberships, internet bills, and so on.

Still, there are mitigating circumstances that lenders have the freedom to consider when evaluating their decision, including substantial asset holdings, large cash reserves, etc.


Family model house renovation with money


Additional Characteristics of FHA 203k Loans

One of the most contentious or confusing issues surrounding FHA 203k mortgage loans springs up when Accessory Dwelling Units (ADUs) are brought into the equation. ADUs are additional living areas typically created within, added to, or detached from the primary dwelling structure. This applies only to single-unit dwellings.

A unit does not qualify as an ADU if it can only be accessed by passing through the primary dwelling area with no privacy or expectation. It must have its means of entrance/exit.

Many people wonder whether these structures are covered under these loan provisions. The short answer is yes. According to FHA guidelines, you are allowed to take out a 203k renovation loan for work you intend to do on your ADUs as long as you meet specific requirements and conditions as follows:

  • You can only work on one ADU on your primary one-unit home premises.

  • To qualify as a borrower under the FHA 203k mortgage program, your application must be considered without consideration for any rental income coming from the ADU.

  • Any ADU under consideration must serve as a sleeping, cooking, bathroom, and general living space and be located on the same premises as the primary dwelling it is attached to in the application.

Increase Your Property Value Through Renovation

Aside from increasing the comfort, aesthetic appeal, and general functionality of your home, one vital benefit comes with making renovations to your property - increasing its value.

When you carry out any structural or cosmetic improvements and repairs we've covered here, you will invest in your property, which will reflect its resale value.

A home with expansive windows, a backyard pool, spacious bathrooms, a modern kitchen, a sound structural condition, a spacious attic, or any other feature or improvement will fetch a higher price than a similar property lacking in any of these respects. When renovations are carried out efficiently, the property value will almost always see a positive increase.


5 Unmissable Desserts Found in St. John County, Florida

Everybody loves a good dessert, and St. John county doesn't let us down regarding this culinary department. However much of a sweet tooth you have, you'll be sure to find something to satisfy you.

If you're planning on moving to St. John, here's a quick guide to local hotspots where you'll find some of the most incredible desserts in the county.


Key Lime Pie at Blackstone Grille

Key Lime Pie is Florida's most iconic dessert, and most restaurant dessert menus feature creamy, tart delight. This American dessert creation is made out of egg yolks, lime, and sweetened condensed milk. It is often cooked in a pie crust, although some prefer Graham cracker crusts or no crust.

All authentic Key Lime pies will feature authentic Florida Key Limes in their recipes. Henry Perrine, a botanist, brought these small round fruits to the state in the 1830s. He sourced them from Mexico, but they have evolved to become a strain that Floridians are immensely proud of. These limes are considered more aromatic than the more common Persian lime varieties, whose juice is yellow rather than the green of Key Limes. Don't miss out!


Banana Pudding at Amaretti Desserts

This dessert creation is considered a historical part of Southern American cuisine, although you will find it all over the country. It is an assembly of layers consisting of sweet vanilla flavored custard, sliced fresh bananas, and cookies (typically ladyfingers or vanilla wafers). Amaretti makes their offering by baking rather than refrigeration, which results in a delectably superior outcome.

Depending on your preference, they top off the dessert with meringue or whipped cream. While many restaurants today will use vanilla or banana pudding instead of an actual custard base, what you will find at Amaretti Desserts is undeniably better.


Strawberry Shortcake at The Urban Bean Coffeehouse Cafe

Florida is famous for its abundant strawberry industry and plantations, so it should have some of the best strawberry-based desserts in the United States. Strawberry Shortcake is made from sugar, flour, salt, butter, baking soda, milk/cream, eggs, and butter.

After the dry ingredients are blended and mixed, the liquid ingredients are mixed in to make the result moist, which results in the shortened dough. This is then made into small spoonfuls and baked until it sets.

To create the filling, fresh strawberries will be sliced up, mixed with a generous amount of sugar, and allowed to settle for a few hours until they lose a good amount of their internal juices (maceration). The prepared shortcakes will then be split and layered with the resulting strawberry filling, whipped cream, and juice. It's a great use of strawberries, and The Urban Bean Coffeehouse Cafe has perfected it.


Goxua at The French Pantry

Goxua translates to 'sweet' in the Basque language, and this is a famous dessert originating from the Vitoria-Gasteiz part of the region. This creation is made by taking a whipped cream base and placing a layer of sponge cake and another one of caramelized custard on top of it. Back in Baque country, you may find this creation filled with jam.

Most people attribute the invention of Goxua to a pastry chef from Vitoria-Gasteiz known as chef Luis Lopez de Sosoaga. At the French Pantry, you can have your Goxua served up in an individual bowl like a custard or the more traditional clay pot you would find in its home country.


La Dame Blanche at Belgian Sweet House Bistro

This Belgian creation is effortless to put together but has a rich history. La Dame Blanche, which translates to 'The White Lady' in English, is considered one of the best Belgian desserts. It was first thought up by the French chef Auguste Escoffier in 1825.

The dessert was named in honor of an opera production of the same name, and the name certainly suits the creation, which consists of vanilla ice cream and whipped cream, topped off by molten chocolate.

Even though the dessert was technically invented in France, the proximity of Brussels to Paris meant that new recipes and innovations traveled fast, and the Belgians were the ones to make it their own in the end.


Final Thoughts

Renovations, repairs, and extensions are a reality for many homeowners and people hoping to purchase a property. According to Federal statistics, 23 percent of the homes currently occupied in the United States were built in the 1950s and 1960s. This means that a large number of homes require some structural or cosmetic repair.

FHA 203k Renovation Mortgage loans make it easier to carry out these works, leading to improved residences, a higher quality of life for you and your family, and an increase in the value of your property. Speak with your lender of choice to find out whether you qualify for the FHA 203k loan.

With over 50 years of mortgage industry experience, we are here to help you achieve the American dream of owning a home. We strive to provide the best education before, during, and after you buy a home. Our advice is based on experience with Phil Ganz and Team closing over One billion dollars and helping countless families.

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