203k loan - 1 year minimum?

Question

If I am renovating a home using a 203k loan and the renovation takes 5 months, does that 5 months count toward the 1 year primary home minimum even though I’m not staying there technically due to the renovations? Also, does the 1 year primary home minimum mean you can’t just refinance it to a conventional loan if you choose before the 1 year is complete? Thank you all

Matthew Porcaro · Answer

Hi Adrian - it's 1 year from the closing date. Remember, you're signing an affadavit saying you intend to move into this property and make it your primary residence. Don't rush the process. Don't try to game the system. This is still an excellent loan, but it doesn't need to be abused to see success.

I did one 203k loan, built a ton of equity, and used other loan programs (hard money, etc) to purchase additional deals within a year after my first one.

Paul Welden · Answer

It’s 1 year from the closing date. So, the 5 months of rehab time is part of your 1 yr minimum, which, if you are not living there during rehab, that means you only have 7 months of actually living there. For all FHA loans, you must intend to live in it as your primary residence for 1 year but people’s goals and lives change.However, don’t do FHA, if you intend to flip the property within a year or if you never really intend to live there. You can also consider conventional rehab loans like the Homestyle or ChoiceRenovation.

Adrian Carr · Answer

Thanks for answering my initial question. Hadn’t heard of the conventional rehabs loans so that is new information that is helpful!

Adrian Carr · Answer

Thanks Matthew. I guess because I don’t have any access to hard money or private money lenders (nor do I want access because of the high interest rates), 1 year in this property seems like a waste of time.. I guess except if it’s a multi-unit because at least I could cash flow it.