Questions about FHA 203(k) loans and FHA mortgages in general (loan, approval)

[lanepulcini]

Hello Everyone,
My Girlfriend and I our thinking about buying our first home in the next 6 months to a year. We would like to get a home that needs some work so that we can make it "ours". We do not have a lot of cash saved up yet (3500-5000) so we've been looking at our options for taking a loan out to do restorations right after the house is closed. I've been reading a lot about FHA loans and specifically the FHA 203(K) home restoration loan. Can someone shed some more light on the 203(k) loan specifically? My specific questions are below:

1) Does the 203(k) loan allow you to bundle your house cost in with renovation costs, meaning you would have a single mortgage to pay?

2) If the 203(k) is not for both renovations and the actual mortgage itself, how easy is it to qualify for a FHA (for the house itself) and also for a 203(k) (for the home renovations) at the same time?

3) has anyone done anything like this before that can give me some tips?

4) Is there any other options out there (other than saving up the cash and FHA) to do something like this?

Just some background about our financial situation, we both make descent money a year (around 40,000) and both have credit over 680 so with that being said, should we wait to have more saved up and not get a FHA or go at least try and get approved. Again, we are in the very early stages of planning so any advice would be great. Thanks!

[FalconheadWest]

A "regular" FHA loan is actually an FHA 203b loan. You're looking at an FHA 203k. With that, yes, it's one loan, just a different program. You need to work with a lender who specifically does 203k and understands them. They will need to send an approved person out to look at what needs to be renovated and the costs, and you need to submit all your estimates and such for underwriting. Because there's a completely different process involved, 203k loans do not close "quickly". They can take 90 days to close. They could close in 60 days... depends on how quickly you move to get the lender what they need and how quickly they move on their end.

[lanepulcini]

Thanks Falcon,
So should I have a house picked out before I even attempt to get the 203K loan approved? Is there any other options that our faster than 60 to 90 days in my situation?

[FalconheadWest]

You can start your approval process through the FHA program. If the house needs work, it's more about the house getting approved for the 203k part, not you. No, there is no faster way when you're working with a government program, except the regular FHA 203b can close in under 30 days.