thoughts on 203K loans for primary residence

[Cristina Marie Najemian]

Hi BP,

My husband and I are looking to purchase a single family home in northern new jersey. We like new updated homes and if anyone knows the market in metropolitan area knows that renovated 3-4 bdrm homes can run you upwards of 800K+ in the more desirable suburbs.

Our idea was to buy a fixer upper that needed an addition; either a second floor or expansion out the back. Most likely a change to the layout as well since colonials are the most desired in our area (what we prefer) and there are a lot of cape cods here. The renovations would be averaging around 200-300K.  We thought about taking advantage of the 203K construction loans, but we've heard some horror stories associated with that loan. Not to mention the inspection process, fees, and lengthy timeline.  Our nightmare would be issues with the contractors, quality of work and of course we don't want to deplete our entire savings to fix problems along the way. 

Has anyone had any experience with these loans and if so, what can you share? Thanks in advance for the advice!