Refinancing an FHA 203k Loan

[Alejandra Tapia]

If I use an FHA 203k loan to purchase a home, I'm aware that I would have to occupy the home for a year prior to renting it out (generally speaking). However, I've read that a 203k loan can be refinanced after 6 months (into a conventional loan), at which point the appraised value of the home would be used in the refinance. My question is: Once the 203k loan is refinanced into a conventional loan, would that pretty much eliminate the 1yr-minimum requirement for an owner occupant?

Also, please correct me if I’m wrong on any other information I shared above.

-Alex

[Dave Spooner]

@Alejandra Tapia Just wanted to add to this - you would not necessarily need 15% to refinance a duplex, as long as you're living there. You should be able to find a lender that will refinance at 5% equity. You would, however, need to qualify for their typically more stringent borrowing guidelines. You would also be required to pay PMI on the loan, but you're essentially already paying that in the FHA MIP.

Your best case scenario is that your renovations significantly improve the value of the property. If that's the case, you may be able to get to the banks desired 20% LTV. This will remove the PMI and reduce your overall cost!

I also want to reiterate Paul's cautions regarding moving out before the year mark. Best of luck!