Refinance out of a FHA 203k Streamline with Equity from Rehab

[Justin Lichtle]

I am in the process of looking for a MFH to buy and rent out with a small budget. I wouldn't mind doing a house hack, but my wife is a little more hesitant. Then today, I had an idea that I wanted feedback on. I would buy a house that needs some TLC with a 203k streamline at 3.5% down. Then I would pay a GC to do minor renovations. The repairs would be done within the 6 months allowed. And when done, the house would be worth more so I would refinance into a conventional loan with the equity gained from the remodal. 

At purchase-

• Loan Amount: $130,275 ($100,000 + $35000 with 3.5% down)
• House Value: $100,000

After reno and 6 payments-

• Loan Amount: $126,621
• House Value: $163,000
• LTV: 77%

Questions for you-

1. After the reno, with a LTV of less than 78%, could you refinance into a conventional?
2. Would refinancing mean you wouldn't have to live in the property like with a FHA?
3. Is this feasible?
4. Is this legal?

[Chris Mason]

Originally posted by @Justin Lichtle:

Originally posted by @Chris Mason:

"Self help" on 203k is a flag for fraud, even if you are yourself a GC.

I understand the DIY and 203k don't mix super well, so let's just say that I pay a contractor to do the work and the numbers stay the same.

 In that case, yup if the equity is there you can refinance. Almost everyone does. :)