Appraisals for FHA 203(k) Loans are based on future as repaired value.FHA allows the appraisal to be increased by 10% if needed!
That means if you were expecting a future appraised value of $400k, and the appraisal comes in at $365k, you can still close the loan! The FHA 203(k) program allows for an increase of the $365k to $400k without penalty or fee increase!
This is important because not all repairs or renovations add dollar for dollar value to the home.
Allowing 110% of the After Improved Value leaves a little room when the dollars spent and After Improved Value don’t match up perfectly.
