I've done 203(k) loans and my buyers have done extremely well.  The problem in this area is finding a loan officer who knows what they're doing. 

The buyer's come to us already pre-approved with a lender, then decide to buy a rehab property and finance it 203(k) but their lender doesn't know how to do it. 

You hit the nail on the head, Lenn! We lend in most of the coutry & would love to help if you need assistance. 

Thanks for the info Josh.  I used a few downpayment assistance programs before, but not a 203(k) program.  I'll have to look into it.

There are certainly some bank repos in my market that would be prime candidates for 203k loans.

Josh, I'm actually in the process of working with a Buyer who is interested in purchasing a bank-owned property via a 203K loan...problem now is, the interest rate is higher and the Buyer doesn't want to have to pay "retail" for improvements he can and wants to do himself...unfortunately, just because it's a Buyer's market doesn't mean that the banks will loan money for improvements without making sure they are completed by a licensed contractor.  Good tool to have in the toolbox, though.

Hey LeShawn - I understand what you're going through, but the Buyer can act as his own general contractor...as long as the improvements are within "criteria". Most lenders WANT to see a contractor in place, but I'm fairly certain he does not NEED one... Just FYI...

Josh...good post - the 203k plan has been around for many years...it just seems to come in and out fo fashion as the market turns.  Jeff

Josh is right.  As long as the client is certified to do the work, they can act as their own contractor.  But they must stick with what work was agreed upon by the consultant and they cannot pay themselves a wage out of the loan.

The newest is a streamlined FHA 203K. The only drawback is this program can't be used with any of the gifted programs and there's a 35K max on the renovation. You're right so many mortgage people don't know what their doing with the program. Another is they don't make as much money on them as they would like.

Jack

Sounds very interesting.  Any website you would recommned for further reading and details???

Jack - you're right about the gifted programs...BUT...there can still be money gifted from family members, friends, etc...just not a Nehemiah fund, etc... Great stuff!

James - Honestly - there are a ton of "lead" sites that require you to submit your email address in order to get more 203k info.  Feel free to contact me anytime & I'll help you understand some of the options a little better.  NJ is an open market just waiting for you!! ;)

Thanks for the info! It's good to know! However the 203K would only apply to buyers that would qualify for FHA loans. Anything similar we can inquire about for buyers using VA or Conventional loans?

I know here in Ohio there used to be a conventional loan product tied to renovation. I don't know if it does exist any more. As for qualifying for FHA almost anyone can and should use FHA.

Jack

The 203K is a great tool for troubled or distressed properties.

Jacks absolutely correct - FHA is definitely the 1st choice in looking for a renovation/rehab product.  The only true hold back for someone may be the loan limitation for that county.  The loan will still need to fall within FHA limits... 

Although FHA has raised loan limits in most areas that would cover most houses and rehabs, at least in my area. My take on the 203K streamline is it's a little more costly and takes a little longer, but what a great way to buy something well below market, make it the way you want and build instant equity. Now if only VA would come up with something along the lines og this program.

Jack

Jack - It would be nice for VA to jump on board...but until then FHA's the way to go!!  Please don't hesitate to ask if you need help here...