Financing in Austin>Question Details

Austin Buyer…, Home Buyer in Austin, TX

Anyone deal with and can explain in plain English how a FHA 203K works?

Asked by Austin BuyerNow, Austin, TX Tue Oct 1, 2013

It's intrigued me bc it's been mentioned a few times. I have a credit score of about 795 and no debt. Do these loans have the FHA limit for conforming?

0 votes Share Flag Financing in Austin

Help the community by answering this question:


First, yes, FHA conforming limits still apply.

As a 203k contractor in California, I am well versed on the process. Depending on the amount of the repairs, there are 2 somewhat different processes, but in simplest terms, for example, you want to buy a PRIMARY Residence (owner occupancy is a requirement) that needs work. You want to finance 100k of purchase and another 25k of repairs. The appraiser will appraise based upon future value with the repairs. as long as the loan to value ratio of the future value is good, the 100k will fund the purchase and you will close escrow. Then, as work is completed, there is a verification step and the 25k will be released as needed to pay the contractors.

Hope that is somewhat clear :). It's a government process, so a tad convuluted
1 vote Thank Flag Link Wed Oct 2, 2013
Exactly. And an account is set up for you to manage the repair budget. The nice thing about this is that it works the same way in Austin as it does in California and anywhere else. This can't be said about everything in Real Estate--in fact, it can not be said about very much in this business. Every market is different, but the Federal Government's rule and regulations stay the same.
Flag Wed Oct 2, 2013
Start by reading this blog.
Andrew Adams is probably the most experienced 203K lender in the country with Wells Fargo Home Mortgage and there is absolutely no one in any state that I would trust more with originating one. He has some useful information in his blog that should answer all your questions.
1 vote Thank Flag Link Wed Oct 2, 2013
I suggest you call Sandy Battise at Gateway Lending. She's local, she specializes in 203(k), and she knows how to make them work without undue headaches.
0 votes Thank Flag Link Sun Oct 6, 2013
Mrs. Battise is well versed with 203(k) Loans.
Flag Sun Oct 6, 2013
I would add one more thing to the responses below. Make sure you and your Realtor understand remodeling and the costs of what you want to do. Watching Saturday morning HGTV seldom makes someone an expert at remodeling a home and if your Realtor can not help guide you through the process, you better be well versed in construction and contractors. Remodeling is not a DIY effort and the costs are always more than you believe. tT

See: Austin Real Estate Secrets
0 votes Thank Flag Link Wed Oct 2, 2013
Well stated and very advantageous for a buyer to work with a Realtor/Agent knowledgeable in remodeling and construction as such will definitely help in working with 203(k) purchase renovation loans.
Flag Sun Oct 6, 2013
Don’t jump in just because you read some favorable story. Make sure you research it long and hard. Most lenders do not offer the program, so ask them why they don’t, good luck,

Jim Simms
NMLS # 6395
Financing Kentucky One Home at a Time
I answer questions about financing real estate based on my decades of experience dealing with mortgage underwriters. This answer is my personal opinion, has not been reviewed or approved by the company I work for. I do not offer legal or tax advice, if you need answers from an attorney or CPA find one knowledgeable in your local market.
Web Reference:
0 votes Thank Flag Link Wed Oct 2, 2013
plain English: cost of repairs are rolled into the loans. Yes, they have the same FHA limits. Please feel free to contact me for a no obligation consultation.

Steve Nusinow
0 votes Thank Flag Link Wed Oct 2, 2013
PS, The limits are the same as FHA 203(b) limits found here:
0 votes Thank Flag Link Wed Oct 2, 2013
Step 1: Get pre-approved by Lender experienced with 203(k) Loans as there are two loans available,
the Streamline and Standard. This way Lender will provide a letter of approval with amount
you qualified for and explain both loans. With this information you will be able to proceed to...
Step 2: Find an experienced Realtor that knows both 203(k) loans and s/he will help you find the right
property within your price range.
Step 3: Obtain an full inspection of the property to determine condition of plumbing, electrical, central
air and heat system, foundation, roof, etc. Inspection report will pretty much dictate what
repairs and improvements are needed and/or recommended.
Step 4: a. If going Streamline 203(k) obtain bid from a general contractor to expedite or can obtain
bids from individual contractors, such as from electrician, plumber, etc.
b. If going 203(k) Standard because property needs structural repairs or repairs exceed $35K,
contact a 203(k) Consultant first as consultant will be required to be on board. Consultant
will provide buyer a list of all required repairs. Buyer uses list to obtain bid from contractor.

Email me at for more information on how to utilize the HUD's 203(k) Purchase Renovation Loan Programs as I am an approved 203(k) Consultant here in Austin.
0 votes Thank Flag Link Tue Oct 1, 2013
An FHA 203K loan is for properties that need repairs, etc. and it allows you to build those into the loan. They're not that complicated and if you would like some more information, feel free to contact me. You would only need a 203K loan if you were buying a property in need of repairs, etc., ie: a fixer upper. And yes, I believe these loans have a limit just like 203B loans.

I hope all these answers are helping you, but you might want to start working with a good Realtor as it seems like you have a lot of questions about a lot of different areas, and on a forum like this you are getting varying answers, some that I've noticed are more accurate than others. A good Realtor will be better able to help analyze your needs and get you going in the right direction…

Joe Jarusinsky, Realtor/Master Instructor, Keller Williams Realty, Austin's #1 Real Estate Company, Call 512-261-4415
0 votes Thank Flag Link Tue Oct 1, 2013
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