FHA 203K Loan, Useful tool or difficult process?

[Keagan Hill]

I am researching and thinking about doing a FHA 203k loan when I buy my first property. I am just getting started, so it appeals to me in the fact that I could get into a home for 3.5% down and also be able to look at properties that are value add. I think that it sounds like a useful tool, but I have also been seeing/hearing that it can be a really big hassle to jump through all the hoops: getting inspections, getting FHA approved contractors, getting the bank to pay the contractors in a timely manner, etc.

Is there anyone who has used a 203k loan who could give some input in what your experience was with it? Is it too much of a hassle to go through all of that? Or is it worth it in order to get started for low money down?

Thanks!

[Paul Welden]

You are correct that the 203k Loan is very appealing because of the min 3.5% down payment and its ability to add value to the property. The 203k is only as good as the partners you select to work with. 

So, you want to work with a lender with verified 203k experience. And regardless of which version of the 203k you use, you will want to work with a HUD approved FHA 203k Consultant. On the Standard 203k, using a 203k Consultant is required but it's optional when doing a Limited 203k. However, it is highly recommended to use a 203k Consultant on any 203k. You will also want to use a contractor with 203k experience or one that has been properly educated on the 203k. Check out http://203kContractors.com.

Just keep in mind that you are only as strong as your weakest link. So, select your partners wisely.