Like with all loans, the San Diego 203(k) Construction mortgage loan has specific limits to how much it can give.
The easiest limit to remember is the limit for the streamlined version of the loan.
Regardless of location, a streamlined 203(k) will get you $35,000.
If you see the limits here and think that this loan could help you renovate your home, then check out our main article about or contact me to start talking about what you need to do next.
Keep in mind that the limits can actually depend on your home and the LTV and the After Improvement Value of your house.
But even if you have some confusion when it comes to exactly how much you can get with your loan, I can help clear up what you can expect.
However, when it comes to figuring out how much money you’re going to get, you’ll need to keep in mind these limits.
Regardless of the loan limit that you deal with, you will have to communicate with the FHA to get money out of your loan.
This will take some time and effort on your part to create a proposal as well as get estimates from contractors out there about how much it will cost to do the work.
Keep in mind that there is a minimum threshold as well.
You have to get $5,000 or more in order to use the standard loan.
The streamlined version of the 203(k) doesn’t have these lower limits.
FHA Standard Limits
When it comes to FHA loans, there are loan limits associated with the different sizes of homes that are available for purchase.
In San Diego, the limits are as follows:
- 1 Unit Property - $612,950
- 2 Unit Property - $784,700
- 3 Unit Property - $948,500
- 4 Unit Property - $1,178,750
These limits are created because of the value of the homes.
In other counties around the United States of America, the loan limit will depend on the home values in the area.
Now, you might also be wondering why there are loan limits for different units of home.
The benefit of getting a multiple unit property is that after you are done remodeling the home, you can earn rent on the other units in the property.
That can make the purchase and renovation of a multiple unit home entirely worth it for people.
In the long term, this will be a great move if you’re looking to purchase a property and fix it up at the same time.
Blog Post Interrupt – What are the Escrow Time Frames?
Now Back to the Blog Post
How Much Money Will I Get?
When it comes to this second set of numbers, it isn’t about the kind of home that you’re getting or renovating.
This number will really determine how much money you get.
This number will come from two different sources.
It will begin with the LTV ratio, but then you will multiply by the lesser of two values.
The first is 110 perfect of the After Improved Value.
This is the value of the house after it has been improved.
If you are trying to renovate a condo with this loan, then you will only use 100 percent for the After Improved Value.
The second will be the Adjusted As-Is Value, but it will have an addition.
There are four different values that are put into this calculation:
- Financeable Repair and Improvement Costs
- Financeable Mortgage Fees
- Financeable Contingency Reserves
- Financeable Mortgage Payment Reserves (this one only applies to the standard 203(k)
Whichever is lower of these secondary values will be the one multiplied by the LTV ratio.
After this calculation has been made, it will be compared to the standard FHA loan limits for San Diego.
Whichever of these numbers is lower, than that is the amount of money that you will get.
Because all of these numbers will be based on the local market and the kind of home that you are in or purchasing, the numbers should be reasonable for the market that you’re in.
As we mentioned before, it doesn’t matter how much money you have been given.
You will have to ensure that you have proposals and estimates ready to show the FHA.
The FHA will then fill out their own paperwork and authorize the use of the money.
This longer method is to make sure that you are truly putting the money to use on your home instead of trying to pocket any of the money.
What do you think?
Leave me your comments below - or, call/text me at (760) 297-4539
Your 203(k) Insider,