# Buying Foreclosure/FHA 203K Mortagage



## Huntmo1 (Nov 30, 2011)

Does anyone have experience with an FHA/203K Rehab loan? There is a property nearby that I am interested in and I was told it was repossessed. I went out and walked the property and it is really nice...several outbuildings, nice barn, 3 acres...the fencing needs some work, but it is nice and private. The house looks to be in good shape structurally, but I was not able to go inside. Looking through the windows, it doesn't look like the kitchen is finished and some work would be needed to finish it, a second bedroom and probably some HVAC work. I'm still looking into it, but was wondering if anyone has gotten a FHA/203K loan before and used it to renovate/purchase a home? If so, what was your experience like? Who did you go through, and what advice would you pass on? Thanks.


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## KCFLY (Sep 19, 2013)

We are currently in the middle of buying a short sale home with a rehab loan.

There is both an FHA and Conventional version of the rehab loans. The FHA has a higher up front out of pocket cost, but requires less of a down payment.

We ended up going with Wells Fargo and the loan side of things has gone quite smoothly so far. They have some specific restrictions on who can do the renovation work and in most cases you can not. You have to hire a contractor. That's the down side. 

The upside is that you can get a loan on a property that is not currently livable. (no kitchen, etc) You have a few months to get your rehab complete, close out the rehab portion of the loan and then the loan acts like any other mortgage.

Once the rehab portion of the loan closes, you are free to do anything to the property you want, just like if you purchased the home with a conventional loan.

We have elected to include only enough work in the rehab loan to get the house livable under bank guidelines as necessary. I plan on doing as much work as possible myself to save some money but cant get a regular mortgage due to the condition of the house. 

Let me know if you have questions.


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## joshcheney (Feb 2, 2011)

Another option is to try to find out the bank that foreclosed on it (check with the registry of deeds and/or tax assessor). If it is a smaller, local lender, they will sometimes have more flexibility in being able to finance it. I helped my brother purchase one that had been foreclosed on by a local savings and loan institution, and they financed something like 95% of the purchase price, plus about $25k for repairs and renovations.


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