FHA loan on a fixer house?

[JMMD]

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@StartingOver10 wrote:

Yes, but it gets complicated depending upon how much work was done without a permit.  If you have a simple item like a patio added without a permit, then you (once you own it) can pull a permit and pay the penalties and have it re-inspected to make sure it is up to code. These things "ride with the property" so you are taking on a lot of liability. If the municipality/county won't pass it because it doesn't meet code then you either have to modify it to meet code or tear it down. You can see where this can become a can of worms if you have multiple missing permits (plumbing/electrical/building etc). I would not advise it for the average buyer at all. Most of the time investors pick up this kind of property and they have contractors bring it into compliance and pay the fines associated with not having the permit. Every city or county has their own rules so check with the appropriate building department first before you even contemplate an offer on a property without all the proper permits.

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This is really good to know. Thank you!

[pdog661]

Check out Fannies homepath program if you are interested in a small renovation program.  \

http://www.homepath.com/

This is a really great program.  35K in renovation monies, and no PMI.

FHA 203K can go much higher then 35K.  You can borrow up to the FHA cap for the zip code.  So if you can borrow up to 550K for FHA then you could borrow that much with 203K. 

So if you wanted to renovate a home that is 150K you could in theory borrow 400K in renovation money..... assuming it would appraise for 550K after renovation.  

[JMMD]

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@pdog661 wrote:

Check out Fannies homepath program if you are interested in a small renovation program.  \

http://www.homepath.com/

This is a really great program.  35K in renovation monies, and no PMI.

FHA 203K can go much higher then 35K.  You can borrow up to the FHA cap for the zip code.  So if you can borrow up to 550K for FHA then you could borrow that much with 203K. 

So if you wanted to renovate a home that is 150K you could in theory borrow 400K in renovation money..... assuming it would appraise for 550K after renovation.  

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Thanks! I was worried that $35K wouldn't be enough to finish the house so this is good to know.

[pdog661]

it's a bit of a process.  I would spend sometime interviewing LO's and make sure they have experience in 203K loans. 

The payment plans are a little different for contractors as well so a contractor with 203K experience is a good idea. 

If you do not need over 35K the streamline 203k option mentioned earlier in the thread is a little easier to get through.  

Homepath is a great program, 5% down, and no PMI.  If you can find a property that is on those list they are a good deal as well, and the Homepath is a fairly simple process from what I have heard.  Again though, only 35K of funds.  

[mauve]

FHA 203k DOES have PMI on it. For the streamline version, renovations must be under 35k AND none of the work can be considered structural. For the full version, you can go over that 35k, but there are far fewer lenders that do it.

The loan can be for UP TO 110% of what the appraisal comes back as. If your appraisal comes in low, you will have to come up with the difference, walk away, or re-negotiate. Also, with the full 203k, you will need to find 203k contractors and have a HUD liason.

[JMMD]

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@mauve wrote:

FHA 203k DOES have PMI on it. For the streamline version, renovations must be under 35k AND none of the work can be considered structural. For the full version, you can go over that 35k, but there are far fewer lenders that do it.

The loan can be for UP TO 110% of what the appraisal comes back as. If your appraisal comes in low, you will have to come up with the difference, walk away, or re-negotiate. Also, with the full 203k, you will need to find 203k contractors and have a HUD liason.

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Thank you for the information everyone. I am going to talk to my LO about our options. We are most likely going to buy a normal house and not a fixer, but it's nice to know what are options are ahead of time.