I recently put my son into one, but I thought it was 203B not K. It took us some time to get a contractor picked out and jump through the hoops. We closed 3 weeks ago and learned a few lessons since then. First was that we should have talked with an engineer in the beginning but that only put us back a week or so. We are working on our first draw to pay for the drawings so we can go to plan check then permits.

My son bought a $70,000 fixer and has plans and money to do $60,000 in rehab. This will include complete renovation inside, adding 7 ft to the rear of the house (350 sq ft.), converting a one car garage and laundry room into a master bedroom and bath with new laundry area, a block wall around the property, new concrete driveway and carport.

Gary, our company has done them before. I am with Eagle Nationwide Mortgage, a division of Eagle National Bank. We do renovation loans with the FHA 203K product for clients nationally.

It sounds like Don's son (earlier comment) did a traditional 203K not the 203K Streamline. The streamline product offers up to $35,000 for "minor" repairs. Typically, these are items that do not involve an engineer, an architect or a building permit. I tell clients these items would include, remodeling baths and kitchens (including appliances), new roof, new siding, paint, flooring etc. The program does not allow for landscaping or a swimming pool (repair to an existing pool only). All of the work must be completed by a licensed and insured contractor.

Also keep in mind that the FHA 3% down payment is based upon the purchase price of the home plus the cost of the improvements. So for example, if the home costs $125,000 and the improvements are $25,000, we will lend up to 97% of the $150,000. The house must appraise for a minimum of the $150,000 too.

It is a great product for a client that sees the "diamond in the rough" and just doesn't know how they are going to do the fix up on it.

Let me know if you have any other questions, I would be happy to answer them for you.

Thanks I appreciate the information.