Should I use a FHA 203k loan or First Time Home Owners?

[Raleigh Lewis]

I want to purchase a property!!! I am currently attending different tax sale auctions. I am also looking for fsbos. I think it will be easier for me to purchase my first property using my name and start selling properties using my llc, so I am able to experience being an actual home owner and challenges that may come about, and use my experience to rent out properties I acquire along the way. I was wondering if the 203k Loan would be a good start out given the fact they also loan you money to rehab the property.? Ir thr first time home owner which i havent really gotten a lot of info on. Please help if you’ve had any experience with these type of loans thanks!!!!!!!

[Christopher Phillips]

@Raleigh Lewis

The FHA loan is generally a first time home owner product. This assumes you plan to live in the home for at least 1 year.

You can put down a minimum of 3.5%, plus the closing costs. The loan is based on the borrower's pre-approval level.

There is a rehab version called the FHA 203K that is designed for purchase and rehab of a primary residence. The total loan is still based on 3.5% down (on the total loan including he rehab funds) and the borrower's pre-approval level.

The FHA 203K takes longer to close. Some sellers don't like them because of that. If the home needs a lot of work, the buyer can run out of funds in the middle of the rehab, which happens a lot. During the budget phase, the bank include a 10% contingency for rehab overruns and surprises.

The FHA 203K usually requires more closing costs. The loan includes other administrative fees and sometimes a consultant. And you have to use 203K qualified contractors, which means you can't do your own work.