203k loan for major addition?

Question

Need advice. Looking to close on a property in S. Tampa and would like to see if theres an option to quickly get a standard 203k loan in place / approved to make major additions to the property and acquire it. Seems like it should technically be possible based on what I've read but hearing from mortgage broker they view additions as "luxury" and would deny. Is that true?

Paul Welden · Answer

@Dean Fiacco

There are 5 types of loans that can help you accomplish this:

Fannie Mae Homestyle

Freddie Mac CHOICERenovation

FHA 203k

VA Renovation

USDA Renovation

They all allow you to include the purchase price + rehab costs into 1 mortgage and 1 closing.

I would allow for 45 days closing but 30 can be done if everything goes perfectly according to plan.

Dean Fiacco · Answer

@Paul Welden So currently looking to acquire a property and wondering if feasible to do 203k loan for both acquisition and improvement. It sounds like that could be tough unless a long close period is negotiated vs 30 days or so. the property would be a primary residence yes.

Paul Welden · Answer

@Dean Fiacco

Quickly and 203k are not usually 2 terms that are associated with each other.

You mentioned you want to make additions and then acquire it, but the 203k requires that you acquire the property prior to making additions. Additions are not luxury items for the 203k, but the addition must be connected to the main house which can be done with a covered walkway or being directly connected to the main house.

Closing on a 203k can be done in 30-45 days if you have an experienced 203k lender and a Certified 203k Contractor in the Tampa area ready to go. Otherwise, closing can take 60+ days.

The 203k experienced lender will select your HUD FHA 203k Consultant which can help you determine how you can accomplish your goals.

HUD has 2 online databases of lenders showing their experience with 203k's.

Hope this helps!

Doug Smith · Answer

It really depends on what you're doing. I assume this is your residence since you're talking about a 203k? Perhaps you can share more specifics and I/we can help shepherd you in the right direction. We're Tampa-based as well.