FHA 203k LOAN - SoCal

[Jason Young]

My wife and I are interested in purchasing a live-in (at least one year) rental property that needs a little fixing up. It's close by where already live and the repairs needed are mostly cosmetic and one of the structures needs to be converted by permit to be live-able and another needs a wall for it to break into a 4-plex as right now, as it's technically a 2-plex with a workshop). It already gets $1850-2200 per unit and has two rented out up until the end of June.

I've never looked at what it would take to get a FHA 203k loan as this is our first and I'm wondering how I can do this?

My wife has income as well and while our credit isn't good yet we'd be able to bring in a co-borrower (family or friend) with perfect credit. How can we make this work?

[Paul Welden]

@Jason Young

Qualifying for an FHA 203k is super easy. All you have to do is qualify for a "regular" FHA loan (FHA 203b) ... that's it. If you qualify for a the regular FHA loan, you basically already qualify for an FHA 203k.

Now, closing on the 203k requires only 1 extra step compared to the "regular" FHA loan ... you will need to get a proposal from a contractor.

You can actually "substitute" the general home inspection for the FHA 203k inspection ... so, no extra step there.

Super easy as long as you have the right partners helping you. 

Having a non-occupying co-borrower on the loan can certainly help, but as long as your credit is 620+, you should be okay without the co-borrower, but check with the FHA 203k Lender to see what their credit criteria is.

Just keep in mind that the co-borrower (family/friend), will also be 100% financially responsible for the mortgage even though they won't live there. 

Hope this helps!