Questions about 203k loans/house hacking?

[Rachael Greene]

Hi guys! I am just getting started in real estate. I am a licensed real estate agent, and I work for a company that buys fixer uppers and sells them to investors. So all day every day I am analyzing deals, seeing houses, putting rehab estimates together etc. I am ready to start planning for my own real estate investing  

I am in Chicago and thinking house hacking is the best way for me to get started. Just a few questions about 203k loans- what are good ways to find lenders for standard 203k loans (planning on my rehab being well over $35k) and realistically what are the qualifications? If I am needing the projected rental income of the property to help me qualify for the loan how does that work? Any other thoughts or experiences are helpful too. Thanks in advance!

[Charles Baldi]

@Rachael Greene I'm currently closing with a traditional FHA loan but learned a bit about 203k in the process since I made some offers that way that just didn't wind up going through. The qualification process is the same as qualifying for an FHA loan except that you need to qualify for a mortgage amount which includes the rehab. These are easy to look up but are basically a credit score over 600 and a steady work income history of at least 2 years. You can qualify up to a 4 unit property. In multiunits you can count the other units as income to help qualify for the loan but only a certain percentage of the income. They use the annual rental income minus the areas vacancy rate (usually around 5%), then 75% of that money as your additional income. Also, for 3-4 unit properties they will also need to pass the FHA self sufficiency test which essentially calculates the projected rent of all units minus vacancy, uses 75% then that number must be equal to your monthly mortgage/PMI/Tax/insurance amount.

In following @203kway on instagram I also heard the tip to offering on short sales and foreclosures with 203k loans will increase your chance of acceptance because they preference offers from live in buyers. Hope that helps get you started a little. Good luck to you!