FHA203k and Fannie Mae Homestyle loans

2 Replies

Hi All, 

This is my first post on BP! Here’s my question. I have a property I’ve made an offer on. I’ll hear within a few days if it’s accepted. The property is in a terrible state. Calling it a level C property would be generous (no roof, no walls, no problem?). I submitted my preapproval letter for a FHA203K loan but they want 25% down for the after repair and purchase. I don’t have that kinda dough. The repairs on the house will probably take 8 months or so. And I won’t have a true estimate of repairs until the offer is accepted (which was much lower than their asking price). Once it’s all done, as long as I don’t go way over my proposed budget, it will be cash flowing pretty well. 

Here’s my question: I know plenty of you have probably been in my shoes. What advice do you have on getting that down pmt? Is there another loan type I should consider instead? Any familiarity with these loan types? Help a newbie out. :-D

Thanks!

Originally posted by @Lisa O'Boyle :

Hi All, 

This is my first post on BP! Here’s my question. I have a property I’ve made an offer on. I’ll hear within a few days if it’s accepted. The property is in a terrible state. Calling it a level C property would be generous (no roof, no walls, no problem?). I submitted my preapproval letter for a FHA203K loan but they want 25% down for the after repair and purchase. I don’t have that kinda dough. The repairs on the house will probably take 8 months or so. And I won’t have a true estimate of repairs until the offer is accepted (which was much lower than their asking price). Once it’s all done, as long as I don’t go way over my proposed budget, it will be cash flowing pretty well. 

Here’s my question: I know plenty of you have probably been in my shoes. What advice do you have on getting that down pmt? Is there another loan type I should consider instead? Any familiarity with these loan types? Help a newbie out. :-D

Thanks!

Notes:

- 203k requires you to live in the property as your primary residence

- 203k programs cannot take longer than 6 months to complete if yours is longer you may want to look at community banks and their commercial construction/rehab programs (aka portfolio lending)

- you can try a fannie mae home style loan

- if you're being asked to bring in 25% down on a primary residence as a min down payment on a 203k then that means your property is being over paid for, A, or B, the repairs youre doing do not add sufficient value so you have to bring in the difference in cash. 203k's can only finance 96.5% of the acquisition and rehab so if you're asked to bring in 25% of the total cost that should tell you enough

best,

Thank you, Albert. I want to appeal to your knowledge for another question. If the after repair value is appraised higher than the purchase plus repairs, shouldn't the loan be approved at a much lower down payment? I have excellent credit and DTI ratio. What gives?

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