Do you have a FHA 203k question you’d like to ask our 203K Specialists? Just post it here on the blog.
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Your question does not have to be FHA 203K related, it can be general FHA or Conventional questions as well. One of our 203K Specialists will answer your question the best to their ability.
We look forward to hearing from you!
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www.203kMortgageLender.com
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Related posts:
Terry Asked:
can you move in before all renovations are done with a 203k streamline loan?
203k Mortgage Lender’s Answer:
Hello Terry,
The answer to your question is “Yes” you can move in before all the renovations are done. For the most part you should be able to live in the home as the FHA 203k streamline is for lighter projects which typically wouldn’t need for you to vacant the property. With maybe an exception of a day or two at times. On the other hand the full 203k version is for more major renovations which is why it allows you to finance the house payments up to 6 months so that you can stay somewhere else during the renovations.
Enjoy moving in.
can you move in before all renovations are done with a 203k streamline loan?
LInda Asked:
Is BNC National bank in Ma. a direct lender and knowledgable of 203K rehab loans
203k Mortgage Lender’s answer:
Hi Linda,
BNC National Bank is a federally chartered bank and, as such, is a direct lender with authority to originate and close mortgage loans nationwide.
The centralized mortgage loan operation center is located in Overland Park, Kansas which is also the location for the FHA 203k Renovation Department.
Best regards
Is BNC National bank in Ma. a direct lender and knowledgable of 203K rehab loans
Sueann Asked:
In May 2011 I purchased a house on short sale with a 203K streamline loan from AmericaHome Key. It was on the tax roll for $160K and I purchased for $103K (I live in TX). I borrowed an extra $6,500 for fixing it up, and had another $12,500 cash of my own money to put into renovation.
We are now 6 months down the road. Although I had all the inspections, etc., done, this house turned out to need a lot more than anybody figured out in advance. I spent all of my $12,500 cash immediately, and still accomplished only about 1/3 of the items which were on my list of things which the 203K $6,500 were for.
Here’s an example: I listed new floors, but I can’t get new floors right now because first I have to spend a lot of money to stop the water from coming in the back of the house, else the floors would be ruined. I’ve been walking around on bare foundtion for 6 months now.
Since I can’t use the 203K funds I borrowed for anything other than what I said I was going to use them for, AmericaHome Key is keeping my money. I have begged, pled, threatened and everything else to get them to just APPLY IT TO THE PRINCIPAL. It’s going to take me about 3 years to fix this house up using my own money, and in the meantime, they just keep my money? Is there anything I can do. I know they can’t give me the money, I’m not asking for it, but since I only had 6 months to do these things under the 203K streamline loan rules, they just need to release my money and APPLY IT TO THE PRINCIPAL of what I owe on this house. Any suggestions?
203k Mortgage Lender’s Answer:
Hello Sueann,
That is a dilemma and unfortunate to hear. Either there wasn’t a home inspection done or it wasn’t a very good one. If not that, then definitely an underestimation of the work that needed to get done.
So, at this juncture if your lender/servicer currently has no solution then you should look into the possibilities of refinancing into a conventional loan and not another FHA loan. This way the remaining repair escrow balance can be applied to pay off your principle loan balance without having to complete the work. It might be a long shot for you due to either the current property condition or lack of equity but it’s a suggestion. Of course borrowing funds to complete either the required repairs or refinance is another.
As another suggestion you can also contact your local HUD office regarding the matter. Here is the link for HUD in Texas:
Best of luck.
Gregg asked:
Hi,
Currently, we have a 15 year freddie mac fixed loan at 4.25. We owe 211000 on our house and it would appraise out at 225000 – 230000. Could we do a 203k remodel loan for $35000 if we wanted to redo our kitchen? If so would it be a second mortgage, 203k remodel loan? Or would we have to refinance everything to a 203k loan? Thanks!
203k Mortgage Lender’s answer:
Hi Gregg,
It sounds do-able but more information is needed. The 203k loan is not a second mortgage it is a first mortgage only. The paying off of your current mortgage loan(s) along with the renovation funds would all be included. So “Yes” you would have to refinance everything into the 203k loan.
Good luck on re-doing your kitchen.
Hi,
Currently, we have a 15 year freddie mac fixed loan at 4.25. We owe 211000 on our house and it would appraise out at 225000 – 230000. Could we do a 203k remodel loan for $35000 if we wanted to redo our kitchen? If so would it be a second mortgage, 203k remodel loan? Or would we have to refinance everything to a 203k loan? Thanks!
Johnny Asked
We are in the process of buying a home with the 203k loan. Once we close can we get rid of the contractor and find another one? The bids he gave us are about 3 times what other contractors can do it for. I understand they need to be licensed and insured but do we need to stick with the “fha approved” contractor that was provided to us. I am assuming that once we close, we can do whatever we want. amirite?
203k Mortgage Lender’s Answer
Hi Johnny,
The answer is “Nope” to: “once we close, we can do whatever we want. amirite?”
The contractor who is approved to do the work is the one you are suppose to go with. The contractor(s) though is your choice so swap out the contractor now before closing because if you try to do it afterwards it can be difficult and time consuming if the lender is to allow it.
“An ounce of prevention is worth a pound of cure”
~ Benjamin Franklin
Good luck.
203k Mortgage Lender
Christine Asked:
I purchased a property using the 203k loan program to completely re-hab a home. Enough work has been completed to get an owner occupancy agreement from the building inspector. Is it possible to get the balance of what is in escrow applied back to my loan balance so I can refinance or does all of the work need to be complete?
203K Mortgage Lender’s Answer:
Hello Christine,
There are actually two answers to your question: If you intend to refinance using an FHA loan, the answer is “NO”. Your 203(k) loan must be completely closed out before you can acquire another FHA loan. The term “closed out” means that you’ve completed all the work you agreed to do and an inspection of the work has been performed and cleared. The lender will then apply any remaining funds to the loan balance so that the case can be closed.
However, if you intend to refinance into a loan product other than an FHA product the answer is “Yes” the loan payoff amount can be reduced by the amount of funds remaining in the repair escrow then after payment in full the case can be closed.
In May 2011 I purchased a house on short sale with a 203K streamline loan from AmericaHome Key. It was on the tax roll for $160K and I purchased for $103K (I live in TX). I borrowed an extra $6,500 for fixing it up, and had another $12,500 cash of my own money to put into renovation.
We are now 6 months down the road. Although I had all the inspections, etc., done, this house turned out to need a lot more than anybody figured out in advance. I spent all of my $12,500 cash immediately, and still accomplished only about 1/3 of the items which were on my list of things which the 203K $6,500 were for.
Here’s an example: I listed new floors, but I can’t get new floors right now because first I have to spend a lot of money to stop the water from coming in the back of the house, else the floors would be ruined. I’ve been walking around on bare foundtion for 6 months now.
Since I can’t use the 203K funds I borrowed for anything other than what I said I was going to use them for, AmericaHome Key is keeping my money. I have begged, pled, threatened and everything else to get them to just APPLY IT TO THE PRINCIPAL. It’s going to take me about 3 years to fix this house up using my own money, and in the meantime, they just keep my money? Is there anything I can do. I know they can’t give me the money, I’m not asking for it, but since I only had 6 months to do these things under the 203K streamline loan rules, they just need to release my money and APPLY IT TO THE PRINCIPAL of what I owe on this house. Any suggestions?
We are in the process of buying a home with the 203k loan. Once we close can we get rid of the contractor and find another one? The bids he gave us are about 3 times what other contractors can do it for. I understand they need to be licensed and insured but do we need to stick with the “fha approved” contractor that was provided to us. I am assuming that once we close, we can do whatever we want. amirite?
I purchased a property using the 203k loan program to completely re-hab a home. Enough work has been completed to get an owner occupancy agreement from the building inspector. Is it possible to get the balance of what is in escrow applied back to my loan balance so I can refinance or does all of the work need to be complete?
Stephanie Asked:
We are purchasing a short sale house with 100% cash. Our credit is not good, but we will own the home outright with cash left over. Can we get 203k loan for re-hab after the purchase? We don’t need financing for the purchase, just renovations to bring house up to date
203K Mortgage Lender’s Answer:
“Yes” you can get an FHA 203k loan right after purchasing the property. If your credit is not good as you mentioned then getting approved for any type of home loan could be a challenge it just depends on how bad and low your credit scores are. The good news is that you will have equity because you are paying all cash so nothing will be owed on the property. For that reason any type of cash out refinance loan…FHA, Conventional or Equity line could work for you as long as you and the property can qualify. If you do get passed the credit qualifying and it then becomes your property’s conditions holding you back then that is where the FHA 203k loan can really come in handy over any other type of home loan.
Best of luck to you.
We are purchasing a short sale house with 100% cash. Our credit is not good, but we will own the home outright with cash left over. Can we get 203k loan for re-hab after the purchase? We don’t need financing for the purchase, just renovations to bring house up to date
Chase Asked:
I completed an FHA203k loan on the home I purchased about a year ago. The entire 203k project was completed about 6 months ago. If I were to sell this home in the next 6 months- would I be able to do the same process (FHA203K) on another home?- Is the FHA203k loan a one time dealm, or can you do it multiple times, and is there any kind of time limit I would have to wait before doing the process over again on a new home?
203k Mortgage Lender’s Answer:
Hello Chase,
The FHA 203k loan is not a one-time deal and although there is no time line using it again, the purpose and intent of the program is for “Owner Occupancy”.
Take Care,
Hello,
I completed an FHA203k loan on the home I purchased about a year ago. The entire 203k project was completed about 6 months ago. If I were to sell this home in the next 6 months- would I be able to do the same process (FHA203K) on another home?- Is the FHA203k loan a one time dealm, or can you do it multiple times, and is there any kind of time limit I would have to wait before doing the process over again on a new home?
Pam Asked:
We are in the process of purchasing a foreclosure using the 203K streamline program. Our mortgage broker seems unsure of what items are needed for this process. We have completed all the FHA 203 streamline paperwork and so have our contractors. In the paperwork it mentions the need for a 203KS Disbursement Draw Form that needs to be completed for disbursement of monies. We are unable to locat that form anywhere and our mortgage broker seems unable to find it. We are hoping to close within the next week (already past our 1st closing date due to paperwork issues). Can you point us to the location of this disbursement form we need for our contractors & us to use? Thanks for your help!
Pam
203k Mortgage Lender’s Answer:
Hi Pam,
Let me start by saying YIKES! Because it sounds like you are in the hands of a mortgage broker that doesn’t have a grasp of the paper work needed on your 203k loan. The good news is that there is no “disbursement draw forms” for the streamline. The lender should release one-half of the repair escrow to the contractor at closing and the other half when the work has been completed, inspected and approved by the lender.
Never the less you can find a copy of the “HUD 9746-A” that is provided and prepared by the HUD Consultant on the full 203k version at: http://portal.hud.gov/hudportal/documents/huddoc?id=DOC_13001.pdf
Wish you the best of luck
Kenneth Asked:
One of the terms for qualifying for FHA203k as I understand it is no other mortgage payments more than 30 days late in the prior 12 months. When is that determined?
Specifically what if I apply for FHA203k, get approval, get the rehab work started and then default on another existing mortgage? Is the 203k approval final at the time rehab work is started? Or can it be revoked in light of the default?
203K Mortgage Lender’s Answer:
A 30 day mortgage late older than 12 months could be acceptable but like most everything in the mortgage application process, there is no cut and dry guideline it’s more dependent on the circumstances. Assuming the credit scores are still high enough for the lender after having a mortgage late, time periods are usually determined from the date of the credit report.
Now whether an existing mortgage stays in place after closing on a new FHA home loan with or without renovations the new loan is final the day it closes and you become the owner.
Best of luck to you
Chase asked:
Hello,
I really hope that someone might be able to answer a few questions I have about my 203k loan. One thing I have learned about this loan is it is difficult unless dealing with someone who has a lot of knowledge about it.
So I bought my home 12 months ago with a regular fha loan and fha203k loan, a total amount of 132000. The selling price was (house$75k)+(203kloan $57k)=(total132k).
So I’ve been in the house for accouple months now afte the renovations. I have owned the house now for 12months and I am ready/need to sell. My house will sell somewhere around 215k
My question is when I do sell and i go to pay capital gains what price will my gains be based on. A(The 74k sell price) B(the combined of sell price and 203k)
I know renovations can be deducted but..in short what am I looking at paying in these taxes? Or does anyone know what they are based on?
203k Mortgage Lender’s Answer:
Hi Chase,
Agreed!!! Working with someone who has knowledge on the 203k products can make a big difference.
Unfortunately your questions are more tax related so they should be directed to a tax professional not a 203k specialist. The 203k loan though is for owner occupied property owners so according to the IRS any capital gains on a personal residence could be exempt up to either $250k or $500k plus an adjusted cost basis can be used…here is the IRS link from where that information came from:
http://www.irs.gov/publications/p523/ar02.html
By the way I noticed in your comment you said:
“I bought my home 12 months ago with a regular fha loan and fha203k loan, a total amount of 132000. The selling price was (house$75k)+(203kloan $57k)=(total132k)”.
So not to confuse visitors at this site who might read your comment a clarification is needed. There is no splitting of FHA loans. It’s either one type of FHA loan or the other…it is either a regular FHA loan that does not have renovation funds or an FHA 203k which includes the renovation funds. So, actually you ended up doing an FHA 203k loan for a total of $132k. If you were told differently than that explains the first part of your comment about working with someone with knowledge on the 203k.
We are in the process of purchasing a foreclosure using the 203K streamline program. Our mortgage broker seems unsure of what items are needed for this process. We have completed all the FHA 203 streamline paperwork and so have our contractors. In the paperwork it mentions the need for a 203KS Disbursement Draw Form that needs to be completed for disbursement of monies. We are unable to locat that form anywhere and our mortgage broker seems unable to find it. We are hoping to close within the next week (already past our 1st closing date due to paperwork issues). Can you point us to the location of this disbursement form we need for our contractors & us to use? Thanks for your help!
Pam
One of the terms for qualifying for FHA203k as I understand it is no other mortgage payments more than 30 days late in the prior 12 months. When is that determined?
Specifically what if I apply for FHA203k, get approval, get the rehab work started and then default on another existing mortgage? Is the 203k approval final at the time rehab work is started? Or can it be revoked in light of the default?
Hello,
I really hope that someone might be able to answer a few questions I have about my 203k loan. One thing I have learned about this loan is it is difficult unless dealing with someone who has a lot of knowledge about it.
So I bought my home 12 months ago with a regular fha loan and fha203k loan, a total amount of 132000. The selling price was (house$75k)+(203kloan $57k)=(total132k).
So I’ve been in the house for accouple months now afte the renovations. I have owned the house now for 12months and I am ready/need to sell. My house will sell somewhere around 215k
My question is when I do sell and i go to pay capital gains what price will my gains be based on. A(The 74k sell price) B(the combined of sell price and 203k)
I know renovations can be deducted but..in short what am I looking at paying in these taxes? Or does anyone know what they are based on?
Raphoug Asked:
I purchased a complete gut renovation last year using a regular FHA loan…with the intention to change to a 203K loan when I had all the permits and contractors and such in order. That took about a year to do, and now that I applied for the 203K my mortgage guy says they won’t give it to me because I’m not living in the house! The house is a shell right now not livable by any means…does this make sense? Please help!
203k Mortgage Lender’s Answer:
Hello Raphoug,
If you bought the property with a regular FHA loan (203b) then that means the property must have been livable originally. Unlike the FHA 203k that deals with property conditions after closing the FHA 203b must deal with property conditions beforehand. That would mean any gutting must have taken place after you purchased it. Now whether that was on the advice from your loan guy or you took it upon yourself at this point what’s done is done.
Your biggest hurdle from what you have described would seem to be the owner occupancy so don’t be surprised if the 203k lender / Underwriter has questions such as…
Where are you living now?
How far is your current residence from the property?
Do you own another property or currently renting?
Did you ever live in the home before gutting it?
How long has it been vacant?
Can you prove you will live there afterwards?
Definitely more information and answers are needed for your situation because there might be some mitigating circumstances that could apply in your case to help you get your 203k loan so it would be best to go over it with a 203k Loan Specialist for your state.
I purchased a complete gut renovation last year using a regular FHA loan…with the intention to change to a 203K loan when I had all the permits and contractors and such in order. That took about a year to do, and now that I applied for the 203K my mortgage guy says they won’t give it to me because I’m not living in the house! The house is a shell right now not livable by any means…does this make sense? Please help!
Darren and Alice Asked:
We own a home in Monument, CO and have a 5%, 30 year VA loan on it. We owe 215K and it appraised this year for 228K. We would like to do a major addition to double our home size that our contractor said would cost approximately 180K-200K to do. Our house is the smallest in the neighborhood at 1800 sqft so we would only be bringing it in line with the other homes around us which are 3-4K sqft, and we’re confident the appraisal after the reno would be more than sufficient. We are interested in a renovation loan that would become a home mortgage loan after reno is completed. Our credit score is 789, 72K annual income, and we would be bringing 150K cash toward the reno/home loan. What could the 203K loan program do for us? We’re interested in getting a lower interest rate than what a conventional mortgage lender is quoting us right now, 4.65%. Thank you.
203K Lender’s Answer:
Hi Darren & Alice,
One recent thing to consider in your situation will be the new maximum FHA Loan Limits for El Paso County which is where the property is located. The limit will be: $271,050.00 for a single family home after October 1st. 2011 unless there is an extension on the current limits. Because you plan on bringing $150,000.00 into the transaction it would appear that your loan amount would be within the new loan limits…$215,000 current balance + $200,000 in renovations LESS $150,000 in cash you are bringing in = $265,000 plus closing costs/pre-paids) so you should still be fine.
As far as the 4.65% your bank is quoting you, there is a good chance with today’s rates you could get something lower (depending on the costs associated with the rate) but just keep in mind that FHA loans must have mortgage insurance “initially” regardless of how much you are bringing in, putting down or the current equity the property will have.
What the 203k loan program can do for you and your situation though is give you a ‘single closed loan’ which will include the renovation and costs with an interest rate fixed for up to 30 years that will not change after the renovation is completed.
We own a home in Monument, CO and have a 5%, 30 year VA loan on it. We owe 215K and it appraised this year for 228K. We would like to do a major addition to double our home size that our contractor said would cost approximately 180K-200K to do. Our house is the smallest in the neighborhood at 1800 sqft so we would only be bringing it in line with the other homes around us which are 3-4K sqft, and we’re confident the appraisal after the reno would be more than sufficient. We are interested in a renovation loan that would become a home mortgage loan after reno is completed. Our credit score is 789, 72K annual income, and we would be bringing 150K cash toward the reno/home loan. What could the 203K loan program do for us? We’re interested in getting a lower interest rate than what a conventional mortgage lender is quoting us right now, 4.65%. Thank you.
Stacy Asked:
We were given an old church building that we would like to convert into our home. We would need about $30,000 to do our own renovations. Would we be able to get a 203K loan just for renovations since we already own the property? We are currently renting a house where we live, so we have no mortgages and only school loan debt.
203k Mortgage Lender’s Answer:
Hi Stacy,
That’s great…you can be at home while at the same time already in church, no more being late. Okay, enough with the jokes. Your scenario sounds do-able but when you say “to do our own renovations” it gives the impression you might have a DIY (Do-It-Yourself) in mind which wouldn’t be allowed as a contractor(s) is required for a 203k Loan. The lender may allow some exceptions as long as they are minor items that you plan to do yourself but that would have to be discussed with your lender.
As far as your question: “would we be able to get a 203K loan just for renovations since we already own the property”? The answer is “YES”, the transaction would be a refinance and if the property is “Free & Clear” then basically all the cash out in your case would be designated for the renovations as there is no existing loan to pay off.
More details regarding the property are definitely needed in this case but it is 203k do-able.
Good luck on your conversion.
Dawn Asked:
Hi – we have found a home we wish to buy that needs some rehab work. The owner was 93 and did not do the necessary upkeep so it needs a roof, new siding, windows and has water damage on some walls/basement which lead to mold. We had someone out regarding the interior water damage who said it’s only about $2k in repair.
We have been told by the seller’s agent that the 203k is our only option since he does not believe it will pass the appraiser (not sure if he’s worried about the value of the house not passing or the condition). We have the funds, etc necessary to do the repairs I noted without additional financing. It appears we would only really “need” the 203k loan in order to ‘get around’ the appraisal issues.
Question we have is do we have to finance the repairs thru the 203k loan, or can we simply just finance the cost of the property and then handle the repairs ourselves with our own cash? We’d prefer not to deal with the hoops of the 203k but understand it may be the only way (due to appraisal issues).
Is it possible to only use the 203k to purchase, but not finance the repair?
Thank you!
203k Mortgage Lender’s Answer:
Hi Dawn,
Congrats on finding the home you want to buy. As you have found out the next step is now the financing and what will be an acceptable condition of the property to get the loan on it. In your case the streamline 203k version should be sufficient enough to take care of the roof, siding, windows and mold issues you mentioned.
The seller’s agent reference that…”he does not believe it will pass the appraiser” was more intended toward the condition not the value of the property which is why the 203k is being recommended.
Now to answer your question…”Is it possible to only use the 203k to purchase, but not finance the repair? The answer would be “No” because regardless of the amount and whether or not you have the funds yourself to correct or make the repairs on the house it still must be financed into the loan which is the whole purpose of the 203k.
Best of luck.
We were given an old church building that we would like to convert into our home. We would need about $30,000 to do our own renovations. Would we be able to get a 203K loan just for renovations since we already own the property? We are currently renting a house where we live, so we have no mortgages and only school loan debt.
Hi – we have found a home we wish to buy that needs some rehab work. The owner was 93 and did not do the necessary upkeep so it needs a roof, new siding, windows and has water damage on some walls/basement which lead to mold. We had someone out regarding the interior water damage who said it’s only about $2k in repair.
We have been told by the seller’s agent that the 203k is our only option since he does not believe it will pass the appraiser (not sure if he’s worried about the value of the house not passing or the condition). We have the funds, etc necessary to do the repairs I noted without additional financing. It appears we would only really “need” the 203k loan in order to ‘get around’ the appraisal issues.
Question we have is do we have to finance the repairs thru the 203k loan, or can we simply just finance the cost of the property and then handle the repairs ourselves with our own cash? We’d prefer not to deal with the hoops of the 203k but understand it may be the only way (due to appraisal issues). Is it possible to only use the 203k to purchase, but not finance the repair? Thank you!
Kristen Asked:
I would like to get a 203k for a renovation but am confused on if I can use the 65,000 I have in equity at all for the down payment. Do you have to take the loan out for the full loan amount and not use any available equity? Do you have to pay PMI or is there any way to avoid that? Also is a 401k loan counted towards debt to income ratio?
203K Mortgage Lender’s Answer:
Hello Kristen,
You mentioned $65k in equity, a down payment and do you have to take the loan out for the full loan amount and not use any available equity…so I’m a bit confused also as I’m not sure if you are referring to a purchase or refinance.
If you mean can you pull money out of a property for a down payment on another, then sure you can do that.
If you mean can you use/substitute the current equity of the property you are purchasing as a down payment then no.
Definitely more clarification is needed so contact the 203k Specialist for you state but here are the other answers to your remaining questions…
Yes, PMI which is called MMI (monthly mortgage insurance) for FHA loans is initially needed for all FHA loans. It’s the same as PMI except PMI stands for Private mortgage insurance and is used for conventional loans not FHA loans. So, there is no way to avoid it at least in the beginning of your loan.
No, a 401k loan is not counted towards your debt to income ratio.
Hoped this helped.
203k mortgage lender
I would like to get a 203k for a renovation but am confused on if I can use the 65,000 I have in equity at all for the down payment. Do you have to take the loan out for the full loan amount and not use any available equity? Do you have to pay PMI or is there any way to avoid that? Also is a 401k loan counted towards debt to income ratio?
Michael Asked:
I’m about to close on an all cash transaction for a house which cannot qualify for a conventional loan. I will need money for renovation,etc. How long should the process take to secure a 203K? Can I begin work, using my own money, before the process is completed?
203k Mortgage Lender Answer:
Hello Michael,
You should figure the 203k loan process on average will take about 30 to 45 days give or take depending on what type of 203k loan it is (Streamline or Full).
Regarding using your money and getting work done before the 203k loan is processed and closed, that would be a “No” if you are thinking of getting reimbursed. If it’s unrelated to the 203k work that is scheduled to get done which will be paid with the proceeds of the 203k loan then that would be your choice. But typically all work should commence after closing.
The 203k Specialist for your state could explain in further details the guidelines plus the pros and cons regarding your personal scenario.
Best Regards
203k Mortgage Lender
Travis Asked:
How much should i expect to pay in closing costs on 160k total price 203k loan? [150 + 10 in repairs] can the seller pay more than the usual 3.5% towards closing? My lender says 10k closing plus 3.5% down minus 3.5 that the seller pays. still 10K at closing. is that out of line. shouldnt i be able to find better? or ask for maybe 5-6% out of seller.
203k Mortgage Lender Answer:
Hello Travis,
To be able to answer the question of how much to expect in 203k closing costs more details would be needed such as whether it’s a Full or Streamline 203k, will you be paying any discount points for the interest rate you are getting, how much in prepays (taxes, insurance and interest) are being collected, along with some other information as well.
Because of those reasons mentioned it is hard to say if $10k in cost is high but the answer is “Yes” that the seller can pay more in assisting the buyer than the current 3.5% you mentioned. Sellers can contribute up to 6% of the sale price which should be negotiated beforehand but if need be the offer can be amended with the seller and lender approval.
If it’s not to late to switch lenders then contact the 203k Specialist for your state on this website and best of luck.
P.S – Although $10k in repairs are being made it doesn’t automatically mean it’s a Streamline 203k, depending on the type of renovations, it can still be a full 203k at that amount in case you were wondering why the question of “full or streamline 203k” would be asked.
I’m about to close on an all cash transaction for a house which cannot qualify for a conventional loan. I will need money for renovation,etc. How long should the process take to secure a 203K? Can I begin work, using my own money, before the process is completed?
Thank you.
How much should i expect to pay in closing costs on 160k total price 203k loan? [150 + 10 in repairs] can the seller pay more than the usual 3.5% towards closing? My lender says 10k closing plus 3.5% down minus 3.5 that the seller pays. still 10K at closing. is that out of line. shouldnt i be able to find better? or ask for maybe 5-6% out of seller.
Garry Asked:
We are going to apply for a 203k loan to buy a house. my credit score is 629 and i make 21,000 a year will i qualify for it?
203k Mortgage Lender’s Answer:
Garry,
More information would be needed to answer that question so it would best to go over your qualifications with the 203k Loan Specialist for your state in private. FYI, your credit score is on the low side but some FHA 203k Lenders have lower minimum credit scores than others.
Good Luck to you
203k Mortgage Lender
We are going to apply for a 203k loan to buy a house. my credit score is 629 and i make 21,000 a year will i qualify for it?
Stephanie Asked:
Can any of the closing costs for a 203K, including the upfront 1% MMI premium, be put into the loan amount?
Are closing costs considered any part of the 3.5% down payment?
203K Mortgage Lender’s Answer:
Closing costs on a 203k purchase are not financed into the loan amount but can be paid by the seller up to 6% of the purchase price. If it’s a refinance then yes you can finance 203k closing costs into the loan amount.
The 1% MIP – Mortgage Insurance Premium on FHA loans including the 203k can be financed into the loan for both purchase and refinance.
MMI…Is the monthly mortgage insurance which is not paid upfront but paid monthly on FHA loans.
The 203k Specialist for your state can answer any further questions if you have more.
Can any of the closing costs for a 203K, including the upfront 1% MMI premium, be put into the loan amount?
Are closing costs considered any part of the 3.5% down payment?
Hector Asked:
that 203k you can ask to the saller for seller’s concession
203K Mortgage Lenders’s Answer
The answer is “Yes” you can ask for up to 6% of the selling price for closing cost on FHA loans including the 203k.
Marius Asked:
I am a realtor selling homes for green upgrade and have a question about whether the cost of solar PV can be added to the standard 203K total rehab cost in addition to the EEM allowance of $8000. For example; Total rehab is $35000, EEM items are additional $8000 and PV panels are $20000. Can the grand total for the renovation be $63000?
Thanks for your help.
203k Mortgage Lender Answer:
Marius,
We appreciate all Realtors, Home Buyers and Home Owners that are helping in the “Green” efforts. You can add the cost of the PV panels to the 203k or the EEM (energy efficient mortgage) but it’s important to remember a HERS report is required for the EEM and there are some after improved value limitations as well. Whether you use the Full 203k for the whole project or a combination of the 203k with an EEM it is an option.
Contact the 203k Specialist for your state for more information.
~ 203k Mortgage Lender
Anthony Asked:
We have a standard 203k loan. Loan closed 12/3/2010. We put in an initial extension request in April 2011 due to severe winter, requesting 3 months additional. Bank made me submit new 30 day timeline with request. We feel we completed all items on new 30 day timeline. Throughout the 30 days I submitted photos and written updates for draw consultant. Never heard anything so assumed extension was fine. Three days prior to loan due date 6/3/2011 I was asked to submit another extension request with another timeline. Still the same extension date as first request. 2.5 month additional on loan.
Bank now tells me extension denied for lack of completion. They want to review in another 3 weeks. Also, escrow is frozen, but they want contractor to continue working. Said they might make a draw exception. Is this the “new” normal banking system. Forgot to add 3 days before my reno loan is set to end they change draw consultants. I am baffled
203k Mortgage Lender’s Answer:
Hi Anthony,
That is unfortunate to hear about your situation but more information regarding the chain of events would be needed to give you any solid advise. It is an FHA requirement that the work be completed in 6 months and FHA does keep tabs on open/pending 203(k) transactions. There’s some latitude and an extension is usually granted if the circumstances are beyond the Borrower’s control. The Lender though does have the right to change HUD Consultants in the middle of the project if they feel a need to do so.
If you feel you are not getting the service or answers you need from the “bank”, you could always go back to your originating Loan Officer or that Loan Officer’s Branch Manager to see what help they can provide.
Also, you can contact your local HUD Homeownership Center for additional assistance
Best of luck
203k Mortgage Lender
that 203k you can ask to the saller for seller’s concession
I am a realtor selling homes for green upgrade and have a question about whether the cost of solar PV can be added to the standard 203K total rehab cost in addition to the EEM allowance of $8000. For example; Total rehab is $35000, EEM items are additional $8000 and PV panels are $20000. Can the grand total for the renovation be $63000?
Thanks for your help.
We have a standard 203k loan. Loan closed 12/3/2010. We put in an initial extension request in April 2011 due to severe winter, requesting 3 months additional. Bank made me submit new 30 day timeline with request. We feel we completed all items on new 30 day timeline. Throughout the 30 days I submitted photos and writen updates for draw consultant. Never heard anything so assumed extension was fine. Three days prior to loan due date 6/3/2011 I was asked to submit another extension request with another timeline. Still the same extension date as first request. 2.5 month addional on laon.
Bank now tells me extension denied for lack of completeion. They want to review in another 3 weeks. Also, escrow is frozen, but they want contractor to continue working. Said they might make a draw exception. Is this the “new” normal banking system. Forgot to add 3 days before my reno loan is set to end they change draw consultants. I am baffled
Kenneth Asked:
What are the income ratios used to determine maximum loan amounts for FHA 203k?
I’m interested in a house that has been gutted. I think I can buy it and do interior only remodel for less than its market value and less than the FHA maximum loan amounts. I have a steady job (over 17 years) and excellent credit. But I’ve been told by conventional lenders I do not earn enough to qualify for the payments on a loan this large.
What percentage of gross (or net) income is allowed for principal, interest, taxes, insurance, PMI?
203K Mortgage Lender Answer:
Hi Kenneth,
The FHA 203k guidelines for income ratios are 31/43 which means 31% of your gross income can go towards the full principle, interest, taxes, property insurance and MI; 43% of your gross income can go towards both your full house payment and your monthly debts.
Now these are guidelines only and it is not unusual to exceed these qualifying income ratios with an automated approval or with compensating factors. If your conventional lender does not do FHA loans let alone FHA 203k loans then they might deter you from pursuing this type of financing so get another opinion from a 203k Loan Specialist here on the site before throwing in the towel so you know for sure. Worst case you will need to adjust your price range but at least then you will have a financing option to make an offer on a property regardless of its condition.
The FHA 203k Loan Requirements and Guidelines post on the blog can answer other questions you might have as well.
Best of luck to you.
203K Mortgage Lender
What are the income ratios used to determine maximum loan amounts for FHA 203k?
I’m interested in a house that has been gutted. I think I can buy it and do interior only remodel for less than its market value and less than the FHA maximum loan amounts. I have a steady job (over 17 years) and excellent credit. But I’ve been told by conventional lenders I do not earn enough to qualify for the payments on a loan this large.
What percentage of gross (or net) income is allowed for principal, interest, taxes, insurance, PMI?
Reanna Asked:
Hello. I fell in love with a foreclosed Fannie Mae property in need of major repairs and improvements, but it went to an auction company before I could make an offer to the listing agent. Now I’m struggling to figure out how to line up a 203K loan in advance of bidding on the property at auction, since there are no contingencies on financing if I win the bid. I will contact a local expert to help navigate that mess, but in the meantime I am working with a contractor to draw up estimates on the work; he would be able to have everything laid out prior to starting the process, so hopefully that would shave some time off the processing timeline.
The lender I’m working with now is quoting me about 0.75% more on a 203K loan than on a conventional FHA loan. Is that pretty standard? Also, I had heard that you can refinance a 203K loan to a conventional FHA loan after the work is completed, but then someone else told me that you can’t refinance that quickly because the loan officer would then have to pay back the commission that he made on the original loan, since you would then be paying less. Is this true?
Thank you!
203K Mortgage Lender’s Answer:
FHA 203k rates depending on the lender as well as on specific days will typically range from a quarter percent (.25%) to a half percent (.5%) higher than a standard FHA 203b loan without any renovation funds. Three quarter percent (.75%) seems a little high unless your loan amount with repairs passed some type of threshold that you are not aware of so it would be a good idea to ask for clarification.
The answer to your other question is “Yes” you can refinance your FHA 203k into a standard FHA 203b loan but of course after all the work has been completed. As far as commission pay backs from the original loan due to early pay offs; that can be true but can vary with different lenders as well as what type of loan and pricing or interest rate you received on your loan.
As a courtesy I would suggest you share what your intentions are with your loan officer upfront.
Good Luck
203k Mortgage Lender
Hello. I fell in love with a foreclosed Fannie Mae property in need of major repairs and improvements, but it went to an auction company before I could make an offer to the listing agent. Now I’m struggling to figure out how to line up a 203K loan in advance of bidding on the property at auction, since there are no contingencies on financing if I win the bid. I will contact a local expert to help navigate that mess, but in the meantime I am working with a contractor to draw up estimates on the work; he would be able to have everything laid out prior to starting the process, so hopefully that would shave some time off the processing timeline.
The lender I’m working with now is quoting me about 0.75% more on a 203K loan than on a conventional FHA loan. Is that pretty standard? Also, I had heard that you can refinance a 203K loan to a conventional FHA loan after the work is completed, but then someone else told me that you can’t refinance that quickly because the loan officer would then have to pay back the commission that he made on the original loan, since you would then be paying less. Is this true?
Thank you!