FHA 203K Loans and LLC's

[Jose Vazquez]

Hi, obviously I'm a newbie and I apologize in advance if I sound like a fool. I was wondering if someone can be approved for an FHA 203k owner occupied loan while simultaneously putting the property under an entity?

[Cara Lonsdale]

An LLC is an entity (a business entity). An owner occupied borrower is an entity.

The FHA loan (not to mention the 203K or 203B) are for owner occupied borrowers. So, they are not offered to businesses. That is why you can't purchase as an LLC. An LLC can't occupy.

You can quit deed any property to an LLC at any point after the fact. However, you run the risk of triggering the due on sale clause that the lender places on the loan. It is a very small risk if your loan is current, and there are no other issues, but be aware that it is risk, and it is there all the same.

The best way to transfer a property into an LLC is to do so either once the property is paid off, and there is no lender, OR to obtain a commercial or hard money loan, or any other loan that would lend to a business entity.