Being Approved for & Using a 203k Loan

[Steven Cobb]

I've heard of using a FHA 203k loan for a house that needs to be rehabbed. Does anyone here know much about this type of loan?

1) What types of homes qualify for this loan?

2) How easy is it to secure this type of loan?

3) Any other details you know would be helpful.

Thanks!

[Albert Bui]

Originally posted by @Steven Cobb:

I've heard of using a FHA 203k loan for a house that needs to be rehabbed. Does anyone here know much about this type of loan?

1) What types of homes qualify for this loan?

2) How easy is it to secure this type of loan?

3) Any other details you know would be helpful.

Thanks!

HI Steven,

1) Any 1-4 unit property

2) Its basically just like any other FHA loan with a construction component designed to release money to your contractor to do work on your property whether it be a purchase or a refinance of an existing owner occupied home (key is owner occupied only not investment not second home)

3) there are limits to how much construction or repairs you do generally the rehab cannot be more than 75% of the total cost of the project upfront or the after repair value (ARV) appraisal so basically no gigantic repair projects

4) luxury upgrades will not be allowed and no detached ADU's or accessor dwelling units

5) qualification wise you qualify like any other FHA loan you'll want to review your income/assets/credit and figure out what your max purchasing power is so lets say its 500k and you find a 200k property then you know you can squeeze in 300k of repairs potentially. Whether this amount of repairs is worth it or not is for you to figure out as the astute investor

Hope that helps.