Lenders for an FHA 203k Loan with GSFA in SD

2 Replies

Hi everyone,

I've been listening to the podcasts for a while now, had tried to partner last year with a friend on deals that unfortunately fell through, but now I am finally getting ready to jump into my first deal! I think the first route I'd like to go is with an owner-occupied FHA loan. My biggest challenge right now is capital for the downpayment, especially since I live in SD which is a hot market. I will eventually invest out of state but for now I'd like to start building equity in a property here rather than continue to pay rent. Also starting to build equity in a property now can help me leverage that equity into properties of the future.

After some research in loans in this area, that drove me to find the GSFA program in CA, which seems like a great program to help with downpayment assistance and provide a 0% interest loan that can be forgiven after 3 years! http://www.gsfahome.org/programs/platinum/overview.shtml

It's also pretty hard to find a deal in SD, so I'm considering adding value to a property through an FHA 203K loan, such as taking a 2br property with enough sq footage and adding an extra bedroom.

The last piece I'm considering adding is the FHA energy efficiency loan, which can be rolled into a 203K loan, reduce electricity expenses over time, and would allow the GSFA downpayment to be provided as a 5% downpayment "gift" that never needs to be repaid (basically a free 5%).

In summary, I'm looking to combine the GSFA program + FHA 203K loan + FHA energy efficiency loan. In talking with my sister in law who's an agent that recently dealt with an FHA 203K loan, she stressed the importance of finding a lender with experience in this, especially given the requirements of finding specific licensed contractors for the work and the amount of time that it would take to put a deal like this together.

Figured I'd ask here first to see if anyone had worked with lenders in SD before on a similar type of deal and what their experience was like, and if they had any positive/negative recommendations of lenders to work with!

Thanks for your advice, happy hunting!

James

Hey fellow San Diegan - I'm not experienced in any of this but glad you're raising all these points as I'm super interested to see what others have to say, as well. I had never heard of the 203K loan or GSFA program... have to add it to my long list of things to research.

Yes @Trevor J. I'm still learning as well, but from a first glance the 203K loan and the GSFA program in CA seem like great ways to get started in real estate! Essentially the 203K loan would allow you to wrap rehab costs into the loan, so you could buy a more distressed property and do the rehab work upfront without extra cost out of pocket. And the GSFA program is something I stumbled across in my research, but it looks like they will lend you up to 5% towards your downpayment and/or closing costs with a 0% interest loan that also has the opportunity to be forgiven after 3 years! I'm researching lenders in the SD area now who have experience with both of these programs to get a little more info.