FHA 203(b) with Repair Escrow is intended to facilitate uncomplicated rehabilitation to a home being purchased from HUD. To qualify, HUD must agree to allow a Repair Escrow per the purchase contract and the appraisal must be marked as "Insurable with Repair Escrows". The funds for the repairs and reserve contingency are borrowed and cannot be more than $5,000 combined. The repair items cannot require plans, consultants, engineers and/or architects and should only be for cosmetic purposes.

See below for an example list of acceptable repair items.


FHA 203(b) with Repair Escrow Forms

Repair Escrow Guidelines Repair Escrow Agreement Repair Escrow Completion Letter
Owner-Contractor Agreement Repair Escrow Conditional Waiver Identity of Interest Form
Contractor Profile IRS W9 Form -----
ELIGIBLE For A Repair Escrow:
INELIGIBLE For A Repair Escrow
• Repair roofs, gutters and downspouts;
• Repair/Replacement/upgrade of existing HVAC systems;
• Repair/Replacement/upgrade of plumbing and electrical systems;
• Repair/Replacement of flooring;
• Painting, both exterior and interior;
• Weatherization, including storm windows and doors, insulation, weather stripping, etc.;
• Purchase and installation of appliances, including free-standing ranges, refrigerators, washers/dryers, dishwashers and microwave ovens;
• Minor repair to exterior decks, patios, porches;
• Minor basement waterproofing;

• Minor mold remediation;

• Window and door replacements and exterior wall re-siding;
• Other minor repair(s) as indicated by the appraiser as being cosmetic in nature and conform to HUD's repair escrow requirements
• Major rehabilitation or major remodeling, such as the relocation of a load-bearing wall;
• New construction (including room additions);
• Any repair that, according to the appraiser's report, not cosmetic in nature;
• Repair of structural damage;
• Repair(s) requiring detailed drawings or architectural exhibits;
• Landscaping or similar site amenity improvements;
• Any repair or improvement requiring a work schedule longer than 60 days; or
• Repair/Rehabilitation activities that require more than one (1) final disbursement

• Repair swimming pools;


 


The repair escrow is not to be used for any repair(s) that would:
• Require more than 1 payment be made to one contractor;
• Necessitate a "consultant" to develop a "Specification of Repairs/Work Write-Up";
• Require plans or architectural exhibits;
• Require a plan reviewer;
• Require more than 60 days to complete;
• Result in work not starting within 15 days after loan closing; or
• Cause the mortgagor to be displaced from the property for more than 30 days during the time the rehabilitation work is being conducted.
.

 

Remember: AFR Does Not Charge Any Lender Fees!

Questions?

If you have any questions regarding this or any other program, you can either chat with a Program Specialist by clicking on the link at the top of the page, call a Program Specialist using the toll free number or e-mail This e-mail address is being protected from spambots. You need JavaScript enabled to view it .  


If you have any questions on becoming a Business Partner or if you are currently a Business Partner and need to speak with a Client Services Representative, you can either chat with a Client Services Representative by clicking on the link at the top of the page, call a Client Services Representative using the toll free number or e-mail This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

 

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