Transforming an abandoned 1976 rural home - 203k Full Renovation Loan

Transforming an abandoned 1976 rural home – 203k Full Renovation Loan

By Leesa Sandoval | Mortgage

Jul 13

In a city like Cleveland, Texas where the majority of the population lives in urban areas, an abandoned rural home can really stick out to the population. 

This rural property was built back circa 1976, undergoing many changes and coming a long way.

Front of the house in 1976

Front of the house in 1976

Especially relevant, past owners already performed remodeling and addition projects, however, the property recently got completely. 

Now, the purpose of the project is to purchase a bank owned REO and rehabilitate the property back to acceptable living conditions.

It is hard to grasp the impact that 203k renovation loans have on projects, but this one for instance will make the property's value will increase over 143% more than its purchasing price. 

203k Full Loan

Purchase Price


Bid Amount




After Improved Value


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In addition to the abandonment as seen in the gallery of pictures above, lots of vandalism occurred towards the property. It caused damaging to the windows, flooring, and already existing paint.  

Taking into consideration of the current conditions, here are some insider details on the transformation it will take: 

  • Removal of damaged soffit
  • Removal of partition wall in the kitchen 
  • Replacement of windows
  • Replacement of front and back doors
  • Drywall repairs and replacements and make it ready for paint
  • New flooring
  • Finish out master back including relocation of drain for walk in shower
  • Addition of pony wall for vanity area
  • New tankless water heater
  • Cap off fireplace
  • Install 550 gallon water storage tank
  • New HVAC unit and ducting 
  • Inspection and update of electrical system

  • Transactions resulting in cash back to the borrower. 
  • Texas Refinance Section 50(a)(6) - renovation loan funds will be paying off the balance of an existing cash-out refinance loan, the renovation is considered a Section 50(a)(6) loan and state regulations would prohibit the lender from controlling the disbursement of funds. 
  • Loans where a borrower(s) has a Deferred Action for Childhood Arrivals (DACA) status. 
  • HBFS does not allow 203(k) transactions through State/County bond agencies, even those that offer a grant. 
  • Identity-of-Interest/Conflict of Interest transactions: IOI/COI transactions are ineligible; however sales transactions between Family Members are permitted. The Mortgage must ensure there are no other instances of Identity of Conflict of Interest between parties in the 203(k) transaction. 

Did you know this about Renovation Loans?

A property that is not eligible for a 203(b) Mortgage due to health and safety or security issues may be eligible under 203(k) if the rehabilitation work performed will correct such issues. ​

About the Author

• Leesa Sandoval • 972.725.9110 ⇒ I have been a Mortgage Loan Consultant in Dallas, TX for over 13 years, and I specialize in FHA 203k Rehab Mortgage Financing .....(Read Full Profile)

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