Can I finance (roll in) FHA 203k rehab loan closing costs into my loan?
One lender says NO! I called elsewhere to get a second opinion and that lender said YES! What a mess. I have no idea and I'm looking everywhere online now...
Does anyone have a concrete answer whether I can roll some closing costs into my FHA 203k rehab loan? Thank you.
@Shannon K. That first lender is incorrect. Yes you can finance rehab into a 203K, but only if the home will be your principal residence. There is a Streamline K $35k and under / no structural changes and a full 203k - anything above $35k that is more encompassing.
Can I finance in the closing costs though? I'm on track to receive a streamline FHA 203K rehab loan. I will be living there, yes. I can't get a matching answer from lenders whether I can roll in my closing costs? @Paul D.
@Shannon K. if the ARV is sufficient enough to cover your renovation and CC, then the short answer is yes. You just need to meet the min investment of 3.50%. I see that you are in NY, and M&T bank who has a really big footprint in NY does a lot of these type of loans. You can try them. Be forewarned though that their DTI guidelines regarding DTI is pretty vanilla. Usually no more than the allowed 43-45% back end ratio. Are you going through a lender or a broker?
Not directly, no. You could "finance" a a portion if you had a higher purchase price, with the seller contributing toward closing costs. FHA limit I believe is 6%, maybe not that much in certain circumstances, and a 203k may be different.
@Shannon K. you may want to try this.
This is the worksheet that all lenders doing 203K use to determine your maximum loan amount
Hope it helps
@Paul D. -- I'm working with a broker now. Supposed to close end of September. Nothing is working out right. Closing costs came in at 14% instead of the 5% I budgeted for and I'm going to have to put up cash I reserved for "pretty things" and cosmetic improvements to cover closing costs instead.
I'm trying to figure out if I can finance some closing costs on a 203K loan since my lender wouldn't let me do a "lender credit" and take a higher interest rate on a 203K. I really need to figure out an option for these closing costs so I have more than a piddly amount to start my cosmetic work. I only needed the 203K monies to cover required "health & safety" issues. The rest I can do myself with cash.
@Wayne Brooks -- It was a foreclosed house, bank-owned, and they will pay no closing costs. 203K is definitely a "different animal" and there seems to be a lot of misinformation I'm getting regarding the process from lenders in this area.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing