203k Loan / Refinance / Investment Property?

Question

I was doing some research on different loan types for fixer uppers and came across the FHA 203k loan. I know you must live in the property to qualify, but was curious if you can refinance after a few years and then use it as an investment property?

Anyone have experience with a 203k loan or know any lenders in the Tampa/St. Pete area?

Andrew Postell · Answer

@Gage Silling some good comments above.  I don't think I saw it - it is true you need to occupy for 1 year but you don't have to refinance after you move out.  Maybe that was implied...but thought I would mention it just in case.  Refinancing costs money...so if I just move out and keep my FHA loan in place that would keep my costs lower.

Hope all of that makes sense.  Thanks!

Tommy Nguyen · Answer

Hi @Gage Silling,

The 203k loan is an extension of the FHA loan. You have to live on the property for at least a year. After one year, I believe you'll pass the "seasoning period" and may  transition to a conventional loan. Please talk to your lender.

Furthermore, a 203k loan requires more regulation as your contractor must be "FHA approved". As a result, you cannot use your preferred handyman or contractor if they are not FHA licensed. Second, the property conditions must meet FHA "minimum property standards". Someone from the FHA office will inspect your fixer upper and determine whether it's up to code. As a result, the process of fixing up a house under a 203k loan will involve more costs, paperwork, regulations, and time.  Hope this helps!

Best,

Tommy Nguyen

Gage Silling · Answer

Great information, thank you!

Gage Silling · Answer

Thanks, Andrew! Great to know!

Gage Silling · Answer

Thanks for the added info Wayne! This is great to know. This definitely sounds like a pretty solid option if I'm able to find the right deal.

Gage Silling · Answer

Thank you, Eric! I will most definitely do so!

Wayne Brooks · Answer

@Gage Silling Just to be clear….there is no actual “fha certified contractor”…..your Lender, not fha, has to Approve your contractor, it’s a simple 2 page document/questionnaire. As long as they have a gc license, insurance and appropriate experience, it is easy to be approved.

Eric Miller · Answer

@Gage Silling , As you probably have seen 203k loans are a real great option to get into a fixer upper with only needing 3.5% down. There are a few caveats and differences, but it generally is a fairly straight forward FHA loan.

If you have any questions on this feel free to PM!

Good luck out there!

203k Loan / Refinance / Investment Property?

Most Popular Reply