There’s only one legitimate way to use a 203k loan for an investment property. You can buy and renovate – or construct or convert – a multifamily (2–4 unit) building and live in one of the units. FHA allows borrowers to purchase 2–, 3–, and 4–unit properties and renovate them using the 203k loan.
Correspondingly, can I do my own work on a 203k loan?
Yes! You can finance repairs needed to pass an FHA inspection or desired repairs done by a professional. If there are DIY home improvements you want to tackle, simply don’t roll them into the bids for the work with the FHA 203k.
Also question is, is it hard to get a FHA 203k loan?
The FHA 203k loan requirements are similar to that of a standard FHA loan. All borrowers must meet the FHA credit score requirements. The minimum FICO score allowed is 500. All borrowers must have the minimum down payment of 3.5%, or 10% if the FICO score is below 580.
What are the cons of a 203k loan?
Cons
- Only eligible for primary residences.
- Mortgage Insurance Premium (MIP) required (can be rolled into loan)
- Do it yourself work not allowed*
- More paperwork involved as compared to other loan options.
What can you use a FHA 203k loan for?
What is a 203k loan?
- The loan may be used for updating, modernization, or total renovation of your home.
- You are able to combine renovation costs and first mortgage with either fixed rate or adjustable rate FHA 203k mortgage.
- All repairs are done after closing the 203k loan.
What properties qualify for 203k loan?
Qualifying homes for a FHA 203k loan include:
- A one- to four-family home that has been completed for a least a year.
- A home that has been torn down, provided that some of the existing foundation is still in place.
- A home that you want to move to a new location.
- The home cannot be a co-op, but some condos are eligible.