30 Year Fixed Rate Mortgages

Sales Focus
This program is designed by the United States Department of Housing and Urban Development (HUD) for the rehabilitation of a primary residence.  Section 203(k) insurance enables homebuyers and homeowners to finance either the purchase or a refinance of a house and the cost of its rehabilitation through a single mortgage.

Geographic Restrictions

• Available in CT, DC, DE, KY, MA, MD, ME, NH, NJ, NY, OH, PA, RI, VA, VT and WV.
• For CT “Nonprime” loans, restrictions apply; please see CT State law for specific requirements.
• NY “Subprime” loans are not permitted

Eligible Borrowers
The following borrower types are eligible:

• U.S. Citizens residing within the U.S
• Permanent Resident Aliens
• Non-Permanent Resident Aliens

• Non-Occupant Co-Borrowers (Maximum LTV is 75% for unrelated borrowers.  If borrowers are related by blood, the LTV can exceed 75% for one-unit properties only)

Ineligible Borrowers
The following borrower types are ineligible:

• Foreign Nationals
• ITIN Borrowers

Eligible Properties
The following property types are eligible and must conform to HUD guidelines:

• 1-4 unit and PUD primary residences
• 1-unit primary
• Must be FHA approved via HRAP or DELRAP. To search for HRAP and DELRAP approved condos, refer to
• Appraisal must be completed on URAR 1004
  • Interior rehabilitation only (no common areas)
  • Standard homeowners hazard insurance is required
  • Condo appraisal

• • • Master insurance policy

• Modular / prefabricated homes

• Leaseholds

Ineligible Properties

• Investment Property
• Mobile homes
• Spec Homes
• Properties eligible under section 223(e)
• Conversions
• Properties with Oil or Gas leases HUD requires that properties financed under this program meet certain basic energy efficiency and structural standards.  However, luxury items and improvements that do not become a permanent part of the property are not eligible for the use of a 203(k) loan.
• Subordinate Financing – HUD allowable non-profit down payment assistance grants are permitted.

• 203(k) Limited - The Limited Repair Program permits homebuyers to finance an additional $35,000 into their mortgage to improve or upgrade their home before moving-in.
  • Ineligible Property - Multi family HUD REO and Mixed-use properties are ineligible.
    • Allows for a 3/2/1 buy down plan.  P&I payments may not increase more than 7 ½% per year.
    • If the borrower has owned the property less than one year, the acquisition cost must be used to determine the maximum mortgage amount.
• The maximum loan amount includes any financed rehabilitation amount.
• The minimum repair cost threshold is not applicable.
• The maximum rehab amount is $35,000.
• NO Contingency reserve requirement. (May be added at underwriter’s discretion.)
• Eligible Work Items:
  • Repair/Replacement of roofs, gutters and downspouts.
  • Repair/Replacement/upgrade of existing HVAC systems.
  • Repair/Replacement/upgrade of plumbing and electrical systems.
  • Repair/Replacement of existing flooring.
  • Minor remodeling, such as kitchens, which does not involve structural repairs.
  • Weatherization: including storm windows and doors, insulation, weather stripping etc.
  • Purchase and installation of appliances, including freestanding ranges, refrigerators, washers/dryers, dishwashers
    and microwave ovens.
  • Accessibility improvements for accessibility for persons with disabilities.
  • Painting, both exterior and interior.
  • Repair/replace/add exterior decks, patios, porches.
  • Basement finishing and remodeling, which does not involve structural repairs.
  • Basement waterproofing.
  • Window and door replacements and exterior wall re-siding.
  • Septic system and/or well repair or replacement.
  • Lead-based paint stabilization or abatement of lead-based paint hazards.
• Ineligible Work Items
  • Major rehabilitation or major remodeling such as the relocation of a load-bearing wall.
  • New construction (including room additions).
  • Repair of structural damage.
  • Repairs requiring detailed drawings of architectural exhibits.
  • Landscaping or similar site amenity improvements.
  • Any repair or improvement requiring a work schedule longer than six (6) months.
  • Rehabilitation activities that require more than two (2) payments per specialized contractor.
  • Required repairs arising from the appraisal that do not appear on the list of eligible repairs.
• Rehab requirements:
  • Final inspection required.
  • “Self-help” is strongly discouraged unless the applicant’s ability to completely perform the work in a timely and workmanlike manner is self-evident and easily documented.
  • Cost estimates from contractor & Homeowner-Contactor agreement required.
  • All work must be completed within 6 months.  (HUD will not grant extensions).
  • No consultant, plan reviewer or specification of repairs/work write-up required.
  • No more than 2 payments per specialized contractor:
  • 1st payment for material costs (not to exceed 50% of repair costs; M&T will accept receipts)
  • 2nd payments upon completion of all work.
• Anti-Flipping Requirements -
  • The list of EXEMPT entities (Sellers who do not have to comply with anti-flipping, regardless of length of ownership) can be located in ML 2006-14.
  • Anti-flipping requirements for properties owned by sellers for 180-360 days can be located in ML 2006-14.

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