Basic financing question with an FHA 203K loan

[Marc Estepa]

I have a very basic financing question. I have a home I am looking to buy in need of repair. I am looking at using an FHA 203K loan.

If the cost of the home is $250,000 and I need to borrow $120,000 for rehab costs, is the mortgage I am paying on the home the combined cost of $370,000 or just the cost of the home only - in this case $250,000?  

Does the bank look at these two costs as separate or does it just combine it for everything when using an FHA 203K loan? For example, when paying closing costs - is it based off the total amount I am borrowing, or just on the price of the home?

Is it the same if I were to use conventional financing instead of a FHA 203K loan?

[Chris Wharton]

@Marc Estepa it's the combined figure. Your loan amount and monthly payment would be based on $370k minus the 3.50% down payment plus the 1.75% up-front mortgage insurance premium. Depending on where the property is that amount could exceed the county loan limit.

Use this link to find out

https://entp.hud.gov/idapp/html/hicostlook.cfm