FHA 203(k) renovation loans

[Eli Moore]

Does anyone have experience with these types of loans? And if so, any recommendations for a lender in the Indianapolis area?

[Matthew Porcaro]

203k is how I got my start into real estate investing. I bought a deeply distressed duplex, and used the 203k to purchase and fully renovate it. Built a nice chunk of equity and also lived for free/cash flowed after I left. 

What questions do you have about it specifically? 

I can make lender recommendations, but one piece of advice I tend to give is check out the 203k endorsement summary (just google it)

HUD each month puts out a list of lenders that have written 203k loans in each market. Just search for Indy on the list, and look for the lenders that did the most.

Then call their brokerage and ask who heads up their renovation lending dept. 

Another way to do it is lookup 203k consultants in your area. I can connect you with those as well. 

The most active 203k consultants in the area will know the most active 203k lenders. 

Also know that the 203k is less and less popular now, since most renovation loans have moved to the fannie mae homestyle. But which reno loan you use ultimately depends on your financial profile. They're very similar in terms of guidelines and process. I've done both personally. 

[Paul Welden]

@Eli Moore

HUD has 2 database of FHA 203k Lenders.

The FHA Lender list allows you to search for bank branch office locations that have done at least 1 203k in the past year. 

The 203k Endorsement Summary Report shows how many 203k's each lender has done in different geographical areas of the country. 

The lender selection is vital to a successful 203k and they area also required to select the 203k Consultant. Because there is no HUD education/training of 203k Consultants, HUD states that the lender is responsible for everything the 203k Consultant does and this is why HUD requires the lender to select the 203k Consultant.

Regarding contractors ... it's best to use one that has been properly educated on the 203k and financially vetted ensuring their financials can support the requirements of the 203k. There's a database of contractors who are Certified 203k Contractors. 

You're only as strong as your weakest link ... select your partners wisely. 

Hope this helps!