A buyer wants to move a load-bearing wall and add 300 square feet to a house financed with an FHA rehabilitation loan.
Correct Answer
D) Standard 203(k), because structural work requires a consultant
Structural alterations and additions fall under the Standard 203(k), which requires a HUD-approved consultant to prepare the work write-up and inspect draws. Other choices: the Limited 203(k) is for non-structural repairs and the number of units is not what separates the two; the programs cover different scopes, which is the whole reason there are two; and FHA insures rehabilitation lending precisely so that a house needing repair can be financed. Source: HUD Handbook 4000.1, 203(k) rehabilitation mortgage insurance
Why This Is the Correct Answer
Structural alterations and additions fall under the Standard 203(k), which requires a HUD-approved consultant to prepare the work write-up and inspect draws. Other choices: the Limited 203(k) is for non-structural repairs and the number of units is not what separates the two; the programs cover different scopes, which is the whole reason there are two; and FHA insures rehabilitation lending precisely so that a house needing repair can be financed. Source: HUD Handbook 4000.1, 203(k) rehabilitation mortgage insurance
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