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 203(k) Specific Fees

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203(k) Specific Fees

Various 203(k) fees allowed by HUD can be financed. Due to the nature of a renovation project, there are many fees the borrower will incur throughout the completion. The following fees are 203(k) specific that must be disclosed up-front and affect the annual percentage rate(APR):

• Permits
• Draw Fees
• Inspection Fees
• Title Update Fees
• Contingency Reserve
• Architect Fees/Engineer Fees
• Supplemental Origination Fees
• Consultant Fees/Plan Review Fees

The Contingency Reserve at Sun West is 15 or 20 percent depending on:
• The underwriter's discretion.
• The complexity of the project.
• Whether or not the utilities can be tested at the time of inspection.

Supplemental Origination Fee

When the Section 203(k) mortgage involves insurance of advances, the lender may collect from the mortgagor a Supplemental Origination Fee. This fee is calculated as one and one-half percent (1-1/2%) of the portion of the mortgage allocated to the rehabilitation or $350, whichever is greater. This Supplemental Origination Fee is collected in addition to the one percent origination fee on the total mortgage amount.

Consultant Fees/Plan Review Fees: The Consultant should inspect the property and provide all the architectural exhibits required for these fees. Architectural and engineering fees are not restricted by this fee schedule. Depending on the scope of the work, a HUD Consultant may conduct the following for an additional charge of $100-$200 including an Initial Review prior to the appraisal, a Plan Review, or a Feasibility Study.

 

In addition to the Consultant's architectural exhibits and depending on the scope of the work, Architects and Engineers can also perform and be compensated for:
• Architect Costs
• Engineer Costs
• Permit Costs

Inspection Fees
Average inspection fees is $100-$250.

Typically, a maximum of five draw inspections will be allowed for inclusion in the cost of rehabilitation.

If all inspections are not required, the remaining fees will be applied to the principal after the Final Release Notice is issued.

Only two inspections are typically used on the Limited 203(k).

Title Update Fee
To protect the validity of the mortgage position from a mechanic's lien on the property, a title company may charge reasonable fees to be included as an allowable cost of rehabilitation.

The allowable fee should not exceed $150 per draw release.
If all draw inspections are not made, money left in an escrow account must be applied to reduce the principal loan amount after the Final Release Notice is issued.

Ineligible Fees for Limited 203K
The following fees and costs may not be financed under the Limited 203(k):
-Mortgage Payment Reserves
-architectural/engineering professional fees
-203(k) Consultant fee
-a Feasibility Study

Determining the Total Rehabilitation Costs:

 

203(k) Rehab Guide Quick Jump

203(k) Rehab Loan FAQs

 

Sun West Mortgage Company holds over 30 years of lending experience with a reputation of providing excellent customer service.

At Sun West, the complete loan cycle is processed in-house. From origination to underwriting and servicing, Sun West ensures you receive a simpler, faster, more direct borrowing experience with no back and forth intricacies. To see if you are pre-qualified or to obtain more information, call (866) 740 3677.

 
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