Can I use an FHA 203(k)

[Jarret Durst]

I am having trouble finding a good answer to my question. I know with an FHA loan you must occupy the residence for at least one year before you are free to use it as whatever you like, but does the FHA 203(k) loan work the same? Hypothetically, could I use an FHA 203(k) loan to renovate a house while I live in it, then sell it after one year for a potential profit or must I stay in it longer? If that is possible, it seems like a good idea. My plan would be live in the house for a year, have it renovated to increase its value (plus it appreciates a little), then either sell it or cash out refi into another property.

[Paul Welden]

@Jarret Durst

The regular FHA loan and FHA 203k follow the same occupancy rules. The regular FHA loan is known as the FHA 203b. So, the FHA 203b and FHA 203k have the same occupancy rules.

You must intend to occupy the property as your primary residence for a minimum of 1 year, but if you can refi after 6 months into a conventional loan, you no longer have the 1 year occupancy requirement. But if you refi into a conventional loan as an owner occupant compared to a non-owner occupied conventional loan, which will have higher interest rates, you may want to check on the occupancy requirements before making that decision.

Hope this helps!