REVISION NEEDED FOR WORKED EXAMPLE 1 SECTION ONLY:

Worked Example 1: Limited 203k on a $285,000 Property

A buyer in Columbus, Ohio purchases a property listed at $285,000. The home needs a new roof ($14,200), updated electrical panel ($4,800), and kitchen renovation ($31,000). Total contractor bids: $50,000. The buyer uses a Limited 203k.

• Purchase price: $285,000
• Renovation costs: $50,000
• Contingency reserve (10%): $5,000
• Soft costs (permits, inspections): $1,200
• Base loan amount: $341,200
• FHA upfront mortgage insurance premium (UFMIP) at 1.75% of base loan: $5,971
• Total loan amount: $347,171

With a 3.5% down payment, the buyer puts down $9,975 (3.5% of the $285,000 purchase price). The base loan amount of $341,200 finances the renovation and contingency costs in addition to the remaining purchase price. The monthly FHA annual MIP on a loan above $150,000 with a term over 15 years and LTV above 95% runs at 0.85% annually. On a $347,171 balance at a 7.25% interest rate over 30 years, the principal and interest payment is approximately $2,369 per month. Add MIP of $246 per month and the total monthly obligation starts at $2,615 before property tax and homeowner's insurance.

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ADDITIONAL NOTE: The Denver FHA limit of $833,750 cited in Example 2 should be verified against current HUD county-by-county loan limits before publication, as the article's publication date is set in the future (2026) and this specific figure cannot be independently confirmed.