203k loans questions and answers

Q. Can the 203(k) mortgage amount be increased to cover the additional expenses?

A. No. This emphasizes the importance of carefully selecting a contractor who will accurately estimate the cost of the improvements and satisfactorily complete the rehabilitation at or below the estimate.

Q. Can the contingency reserve be included in the loan?

A. The contingency reserve can be included in the FHA 203(k) mortgage. According to the 203(k) underwriting guidelines (rules):

A Contingency Reserve is always required for a Standard 203(k) transaction.  The minimum and maximum Contingency Reserve is established as a percentage of the Financeable Repair and Improvement Costs.

However . . .

A Contingency Reserve is not mandated for a Limited 203(k) transaction; however, at the mortgagee’s discretion, a Contingency Reserve account may be established and financed.  The Contingency Reserve account may not exceed 20% of the Financeable Repair and Improvement Costs. 

https://web.archive.org/web/20180812132502/http://203kconsultant.biz/FAQ/FAQ's.asp

http://www.rehab203kloan.com/fha-203k-loan-question-and-answer.php

https://www.hud.gov/sites/documents/WB_FHA203K_09-24-14_REV.PDF