203K Rehab Loan Question

[Tom Casey]

Hello all!

I'm a new investor here in Chicago and for my next investment property, I'm looking to purchase a multi-unit building using an FHA 203K loan. I have a question regarding the loan amount that I haven't been able to find a definitive answer for.

I’m wondering if I buy a 3-unit building and want to convert it to a 4-unit, could I get a 203K loan up to the max amount allowed for 4-units?

I ask because the max loan amount for a 3-unit is only 587K whereas the max for a 4-unit is 729K. That extra $140K would give me a lot more to work with for the rehab and I can value add by creating a legal extra unit. I think if this is possible, it could be a great strategy for a 203K rehab project.

Please let me know if you know the answer. Thanks for your time!