203k loan alternative for non owner occupied

3 Replies

Have a two unit residential that would be an OK rental while the market is appreciating. A FHA 203k rehab loan is perfect for it but one unit has to be owner occupied to qualify.

Any other similar govt loans or other products with 3% down payment?

Not to my knowledge, perhaps someone else has better insight towards govt loan programs.  That said, most private lenders are going to be looking for a bigger down payment, and if not you'll be paying through the eyes for the risk (via interest).

You say it is an "OK" rental while the market appreciates.  I want to emphasize caution.  If you're looking for a 203k loan structure, it indicates to me you likely have limited cash reserves.  If your rehab goes over, you experience a vacancy or large unexpected maintenance issue... an "OK" property can quickly cost you money for the year and that appreciation will not help you one bit.   

Also keep in mind the time of year and your rental seasons, winter can take longer to find tenants.  That may not be the case in your area, but something to consider.

Look at a commercial bank, and ask them for a construction loan.

My first deal was a 203k FHA loan. I will never do a 203k loan again. It was such a hassle getting the money to be released from Wells Fargo, and the Insectivora were a pain in the butt.


I did a hundred or so 203k deals in the 90's. Back then you could do investor loans. My first deal was a brick 3 unit on the north side of Chicago. I got a loan of about 300k on a 145k purchase. This deal cash flowed my growth as I did over 400 renovations that I flipped. If you could figure out a way to do a 203k as an OO, I think it could work for you. The thing about a 203k, once you have completed the renovation, you could refi out of the HUD loan.

Carbondale, CO is near Aspen? Rental market should be good. Would loan limits be an issue as HUD has max loans?


Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here