All Forum Posts by: Paul Welden

@John Winters

Zoning changes can be quite lengthy but worthwhile in the long run. 

One of the cool things about the 203k is that you can use 75% of the market rent for the units you will not occupy to help you income qualify for the FHA 203k loan.

Hope this helps! 

@Matt Sora 

No, the 203k does not have to be for a house that needs a certain amount of fix up. The property could be in perfectly livable condition but you may just want to update the paint or a toilet or something small, or you could tear down the property and rebuild it (must keep foundation). 

Hope this helps! 

@Ralph DiBugnara

The FHA 203k is a great loan option for mixed used residential but the rehab money cannot be used for the commercial space and can only be used for the residential area.

Hope this helps. 

@Jay Gibbs

Everything I quoted is from HUD SFH 4000.1, which are HUD guidelines.

The 203k Consultant does have discretion on the # of months he/she/they think the property will not be habitable. But that can be negotiated between you and the 203k Consultant. 

@Jay Gibbs

Yep ... exactly! 

@Khalid Ellis

for contractors doing 203k work, you really need one that knows and understand the 203k and a contractor with 203k experience or has at least been properly educated on the 203k with strong enough financials to start the project with $0 deposit money. 

I suggest you work with any of the Certified 203k Contractors on that list. 

Just make certain that you already the WWU (Work Write-up) from the 203k Consultant first before the contractor goes to the property. 

Hope this helps! 

@Jay Gibbs

According to HUD SFH 4000.1, the borrower on an FHA 203k is required to make all mortgage payments.

However, you can include up to 6 months of mortgage payments (PITI) into your mortgage loan and that money will be used to make the mortgage payments for you.

HUD SFH 4000.1 also states "At least one Borrower must occupy the Property within 60 Days of signing the security instrument and intend to continue occupancy for at least one year. 203(k) Rehabilitation products may have different requirements for the length of time to occupy the Property."

and ... "A Mortgagee [lender] may establish a financeable Mortgage Payment Reserve, not to exceed six months of Mortgage Payments. The Mortgage Payment Reserve may include Mortgage Payments only for the period during which the Property cannot be occupied. The number of Mortgage Payments cannot exceed the completion time frame required in the Rehabilitation Loan Agreement."

So, yes, you are required to occupy the property within 60 days but on a 203k, that rule is suspended if the property is not able to be occupied because of the rehab, and you can increase your loan amount equal to 6 months max of mortgage payments use that to pay the mortgage payments for the 1st 6 months. 

Hope this helps! 

@Allison Black

Remember you are required to have the 203k Consultant's Inspection and Report completed BEFORE you have the contractor prepare their proposal. 

The lender is responsible for selecting the 203k Consultant (Reference HUD SFH 4000.1).

@Allison Black

Check out Certified 203k Contractors. There are quite a few in CT. 

All contractors that are accredited have completed a 203k education course and a thorough vetting process. 

Hope this helps! 

@Rafael Norat

Another thing regarding appraisals and the 203k is that you cannot get the appraisal ordered/completed until after you have the 203k Consultant's Report and the Certified 203k Contractor's proposal, which are used to determine the ARV.

Both of these usually take longer than 10 days. 

Hopefully you wrote in your purchase contract the HUD required verbiage, which is "Contract contingent upon loan approval and buyer’s acceptance of additional required improvements as determined by HUD or the Lender or the buyer."