FHA 203(K) LOAN PROS/CONS?

2 Replies

BIGGER POCKETS! 

I hope this discussion finds you well! I wanted to reach out to anyone in the BP community and see if I can get some advantages/disadvantages when it comes to FHA 203(k) loans. I understand bits and pieces when it comes to these "K" loans, however, I am looking to lean towards someone who has a broader understanding on this subject.

Any feedback would be greatly appreciated! 

Best of luck and HAPPY HOLIDAYS! 

JUSTIN PETERS

D/FW 

REAL ESTATE INVESTOR 

One of the cons with any FHA mortgage is the permanent PMI on the loan. I think the Fannie May HomeStyle Renovation loan is a superior product. Maybe @Upen Patel , who is a mortgage broker has some insight as well.

@Justin Peters  FHA 203(k) loan is like any other FHA loan. It requires a min 1 yrs OO, min 3.5% down and have a monthly MI.

With regards to the FHA 203(k):
Pros: You can roll rehab costs into the loan, up to 50% of the purchase value. If the rehab loan is <=$35K, then its a streamline loan, which is a bit easier to work with.

Cons: You, your lender and contractor have to be well organized. ALL the work that you want to be paid by the loan has to be done by a contractor. If it a standard loan then you will need a GC and also a HUD consultant. Streamline loan allows you to select individual tradesman, and NO HUD consultant.

So the con is more from the perspective of how a rehab loan works. You will face these cons with ALL rehab loans.