203 loan

4 Replies

If I decide to do a loan with 203K and the house costs 100K and I need another 100K for fixing it ... do I pay 20% of the cost of the house (100K) or the total loan amount (200K)?

Sebastian, I would first encourage to find a lender experienced in renovation loans and talk through the details, additional costs, and steps involved.  Don't work with anyone who has not done them as that can cause problems and kill a deal (speaking from experience).

Your downpayment will be based on the purchase price of the house.  For a 203k owner occupier you're looking at 5-10% unless it is a multifamily.  There is also a conventional loan called the Homestyle which is also a renovation loan, 5% down for owner occupiers (1-4 units) and 10-20% down for investors/second homes.  

Be aware that the amount you can borrow for renovations is capped at a % of the ARV of the home and also by local loan limits. Talk to a lender and let us know if you find a project.

Thanks! Micki great information! I guess I should sit down and talk through more details.  That Homestyle loan sounds good ... I have to find out more about it ... 

@Micki M. actually I have in mind a 3 plex ... So I'm still not sure if I can afford conventional+203k loan or will have to go with FHA+203k ... House - 15k already stripped down to studs (looks like a pipe broke inside and now they want to walk away) ... I told my realtor to put full offer on it ... my wife will meet with the lender tomorrow. Hope this goes through. We'll probably need 100k to fix it up the way we want to ...

Any suggestions how I can find contractors which are familiar with 203k loans?

I will second [email protected] McNie said about getting a mortgage lender that is very familiar with a 203 k loan. There is a ton more paperwork that has to be done, and it is vital that they have experience. If they have done it before, then they will able to give you contractor references in your area that are qualified and experienced doing 203k loans. My mortgage guy was AMAZING in helping me push the deal through to close,  despite several obstacles, and extensions. He is a vital part of my team!

 The GC must be licensed bonded and insured. without a GC that is familiar with 203 k loans, and the paperwork and requirements they have to complete, a contractor can make you lose the deal as well. It almost happened to me...

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