FHA 203K Loan Program.

[Christopher Iafelice]

Does anyone have experience using the FHA 203K Loan program?

I'm in NJ, and I've been looking for ways to puschase property using a low down-payment option to ease the burden of chewing up capital in the beginning stages of my investment goals.

Appreciate the help and thanks again,

CI

[Christopher Phillips]

@Christopher Iafelice

It's for owner occupied homes. up to 4 family homes. 640 FICO or better for 3.5% down. 500 to 639 need 10% down. $100 down for certain HUD homes.

Standard program allows up to 110% of the after improvement value based on appraisal. Certified 203K contractors must be used. So, you have to interview contractors and get bids. A consultant is required to perform a thorough home inspection to do the complete work write-up. Rehab money held in escrow and paid as work is performed.

Total that can be borrowed is limited to the FHA caps per each county.

Not all lenders participate, so you have to ask around.

31/43% DTI ratios for underwriting.

In general, takes longer to close. Usually expect around 90 days or so.

You have 30 days to begin work after closing and 6 months to close out of the 203K.

As far as making offers on properties, it's usually best reserved for properties listed as cash or 203K only. You can obviously use it for other offers, but the amount of time it takes to close can weaken offers competing against conventional loans or cash.