FHA 203(k) loans (agent, mortgage, mortgage, fees)

[VivaLaEvie]

Hi! Who out there RE professionals, buyers, contractors, anyone, has had any experience with an FHA 203(k) loan to repair and improve a new home purchase?

I have been doing research and there is not the best information out there. Is the paperwork a total hassle? How are the fees? Are the reviews brutal? How long does it take?

What do you have to do to get more than $35k?

Was it worth it?

I want to hear everything, all your stories, so post away!!

[desertsun41]

I have done 2 of them as an owner/builder. It was 14 years ago back east. I suspect things changed some but I will still brag about what great program it is/was.

The first one I dont want to talk about because the major remodeling caused a divorce. The second one I bought a 300 SF home on 3/4 acre. It was a 1 bedroom artists studio kinda layout. It took about 60 days to get all the approvals which was normal for any mortgage back then. We never heard of 30 day closings anyway then. I bought the home for $54K and borrowed $99K. Since I am a contractor things went more smooth cause I proved my skills to them. I built a beautiful 3 bed 2 bath with a long hall down the middle and vaulted ceilings in most rooms.

The money borrowed also was used to make the limit 6 mortgage payments so I never had to lay any money out of my pocket for 6 months. In the end I had $7000 left which I had the choice of not taking and making the final mortgage amount $92K or take the money to do whatever I please with it. Which I did and promptly bought a boat.

There were several draws. If you use a contractor you need to call the lender with notice to say when to be there to pay the contractor. They never failed me. One thing, if you do the work yourself, you ARE NOT allowed to pay your self any salary or wages with 203K money. The money can only be used to buy materials if your doing the work. So what I did was set up a paper company so it could collect for the kitchen draw. I only did that once so I could have extra to do more things like landscaping.

Things may have changed slightly these days but Im sure it is not by much.

Go for it. It is sweat equity at its finest.

[desertsun41]

Let me add one more thing. There are not alot but a number of lenders who advertise they do 203K but no one on staff has any idea how. The key is finding a 203K lender who does lots and lots of them.

Give this guy a try. If he cant do your area then he can send you in the right direction. https://www.wfhm.com/loans/rob-weber/index_reno.page
The 203K is all this guy does. He is probably the best and can push the loan through quick like 6 weeks. You will not get a 30 day closing on these things.

Good luck.....

[Roger Watland]

Viva,

You can get more than $35K, but you will need to use the regular 203K program. It will require the expense of a HUD approved consultant.

If you are contemplating energy efficient improvements, you can stretch the 203K Streamline program to $37,000.

I do the 203K Streamline loans in MN.

[Brandon Hoffman]

The streamlined is not any more difficult than a normal FHA loan. The other version is more difficult. Make 100% sure you have an agent that understands the process or it could get ugly.

[Roger Watland]

The HUD mortgagee letters can be relied upon to determine minimum parameters, however, the investors that offer the 203K products can and do add to the standards their own custom template of requirements that they feel mitigates risk.

For one thing, many investors require the proposed improvements to be completed in 3 months, not the 6 months allowed per the mortgagee letter.

I have an investor that allow the 6 months and another that has a 3 month requirement, however, I am able to offer the customer significantly better pricing with the investor with the 3 month requirement.