Can I Invest in Properties with the FHA 203k?

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Mortgage and Lending with AnnieMac Home Mortgage NMLS #38670

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The FHA 203k program is specifically for primary residence properties only. It is not intended for investment purposes in the sense of buying a home, renovating it with the FHA 203k, and then selling it. A process that is better known as “flipping.”

 

 

There is, however, a situation in which someone could legitimately utilize the FHA 203k in an investor-like fashion. If a homebuyer were to purchase a multi-unit (multi-family) property in which one of those units were their primary residence, then they could use the FHA 203k to renovate the entire property (up to 4 units). They could potentially rent out the other units (1, 2, or 3) and have the tenants pay part, all, or even more than the cost of the mortgage.

 

 

For young investors looking to get their feet wet in the investment world, buying a multi-unit (multi-family) property and financing with the FHA 203k may be the answer. Ultimately, an investor would be able to get into a multi-unit (multi-family) property with as little as 3.5% down and have their tenants pay part, all, or even more than the mortgage cost. Two years later, they could turn around and refinance the property out of the FHA 203k and into a conventional type loan. Once that happens, they could start all over again!

 

 

This is the only way an FHA mortgage can be used for investment properties. The 203k program is not widely known but it is a great vehicle for a first time home buyer, an investor looking to get a start with limited funds, or someone who just wants to live rent or mortgage free.

 

 

Getting creative and working within the rules of the FHA and the FHA 203k renovation mortgage can be a starting point to you and your investment future!

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Topic:
Home Improvement
Groups:
The FHA Mortgage Group
FHA 203-k and FHA 203-k Streamline Loan Group
Tags:
fha 203k loan
fha 203k
fha guideline
fha 203k mortgages
fha 203k renovation mortgage
fha investment

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Rainmaker
170,387
Trisha Bush-LeFore
Preferred Properties Land & Homes - Walla Walla, WA
Providing Realtor Services in the Walla Walla Area

Jeff,

Thanks for sharing this FHA information. I will share it with my clients.

May 27, 2014 02:38 AM #1
Rainmaker
1,112,093
Jeff Jensen
The Federal Savings Bank/Lending in 50 states - Greenwich, CT

Hi Jeff, Welcome to Active Rain.  I had never seen one of your posts before.  Thanks for the insight!

May 27, 2014 07:34 AM #2
Rainmaker
445,509
Dave Halpern
Keller Williams Realty Louisville East (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert

The 203k loan is an under-utilized tool. Many buyers could create equity by using the FHA/203k loan to buy and renovate homes that need some work.

Aug 10, 2017 09:29 PM #3
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Rainer
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Jeff Onofrio

FHA 203k Lender and Homestyle Reno Specialist
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