Financing in Chicago>Question Details

Angie, Home Buyer in Chicago, IL

FHA 203k Loan

Asked by Angie, Chicago, IL Sun Oct 5, 2008

I was told last friday that the guideline to qualify for the FHA 203K Loan has changed drastically. I figured as much with the economy, nut not this much. I currently own a two flat with my Mom. Our mortgage is 1800. I want to purchase a distressed single family home and rent out my apartment. I was told by a Flagstar rep on Friday that with the new guidelines I would need to have 12 months of rental income in the bank for the entire mortgage amount, not what I would be renting my apartment for. In other words, before I could qualify I need to have 22,000 in the bank to secure a rehab loan. Is this true? If I had 22,000 in the bank, why would I need a rehab loan? The asking price of the distressed property is 99,000, you can't by a vacant lot in this area for less then 160,000 so I know it would be a great buy.

Help the community by answering this question:

Answers

19
Angie,

I'm sorry you're not receiving accurate information. I see a couple posters know the correct guidelines though.

You need 25% equity in your departure residence to use your rental income to "offset" the mortgage payment on your current home. If you don't have enough equity, you'll have to qualify for both mortgage payments simultaneously. To acquire the new home, you can use a 203K to buy it and your minimum investment as of January 1st is 3.5%. You don't need any reserves to buy a single family with a 203K but having reserves will help you get an automated approval.

You can use a 203K to do a complete gut job for your property (the foundation must stay in tact!). I have a client who just purchase a 35k home and is doing 75k in renovations to it. He's tearing it down to the frame and rebuilding.

Also, I'm a Local Renovation Specialist (My focus is on rehab lending) with Wells Fargo, my suggestion is for you to come by my office to speak with me (if you're still in the process). This is a complex program and you're going to want someone who specializes in this type of financing.

I've wrote numerous posts on Renovation Financing and have done many loans for Trulia users. Please read some of these past posts I've made.

http://www.trulia.com/voices/Financing/I_have_recently_inqui…
http://www.trulia.com/voices/Financing/FHA_K_Rehab_loan_in_G…
http://www.trulia.com/voices/Financing/How_is_the_loan_amoun…
http://www.trulia.com/voices/Foreclosure/Foreclosure_is_bein…

Here's my contact info. If you decide to come by the office (we have free parking in downtown!), please call ahead of time as I may be out at an appointment.

Rob Weber
Wells Fargo
511 W North Ave
Chicago, IL 60611
847.404.7006 - cell
rob.weber@wellsfargo.com
Web Reference: http://robweber.com
3 votes Thank Flag Link Sun Dec 21, 2008
At Guaranteed Rate, we have a FHA 203k department that has the experience to work with you. Call
Aimee Renkes
Vice President of Mortgage Lending
203k Rehabilitation Loan Specialist
P: (312) 379-3529
C: (312) 399-3191
F: (773) 516-6026 aimee.renkes@guaranteedrate.com
http://www.guaranteedrate.com/aimeerenkes
NMLS: 755968
320 W. Ohio St Ste 410 • Chicago, IL • 60654

NMLS ID 2611 | NMLS Consumer Access
Licensing Information: https://www.guaranteedrate.com/licensing
1 vote Thank Flag Link Thu Mar 7, 2013
CFS Mortgage has helped many home owners get approved with 203k loan. They have a team of experts who will help you navigate the 203k lending process. Check out http://www.cfs203k.com for more details.
0 votes Thank Flag Link Sun Sep 8, 2013
From my experience with 203k loans, the best advice is to use a lender that offers assistance via third party with 203k processing.
This shortens the closing time by weeks. Try http://www.cfs-mortgage.com/203k for more information.
0 votes Thank Flag Link Sat May 25, 2013
It's been many months since I wrote my last post in this thread (halfway down, large post) and there have been grumblings (nothing official) that FHA may go the way that conventional financing has already gone/headed, requiring that a borrower wanting to rent out their departure residence must have landlord experience before being able to count that income (otherwise, most people could not qualify for both mortgages simultaneously). This is PURELY rumor but if there's even an ounce of truth to this, those of you sitting on the fence waiting for prices to drop still, should get off the fence and contact your local Realtor... There are plenty of active agents on Trulia working for your business and in your neighborhoods.

Those who try to time hitting the bottom will only realize it when they miss it.

Happy house hunting!
0 votes Thank Flag Link Fri Jan 15, 2010
Angie,

If you need help with guidelines and questions about the 203k loan please go to http://www.203kloanillinois.com. There is a lot of good information there.

David P Cruickshank
Ardain Mortgage Corp.
847-354-5455
http://www.davidpcruickshank.com
0 votes Thank Flag Link Fri Jan 15, 2010
Hi Angie Can you please mail me your experience on this, I am going through the same pain, Would appreciate your advice on it my mail is sribop at yahoo dot com

I live in chicago and looking for a property in park ridge.
0 votes Thank Flag Link Wed Aug 5, 2009
I see that the previous poster is a HUD Consultant -- I'm going to assume he has someone on the financing end who keeps him very up-to-date. As a lender, I'd like to point out that while he may be knowledgeable, most other HUD Consultants will not be as knowledgeable. Realtors are experts in the property piece, Mortgage Consultants/Loan Officers are experts in the financing piece and HUD consultants are obviously experts in all things related to the property with regards to HUD/FHA guidelines.

As a rule of thumb, If you have questions about financing, seek the person who's job is to provide the financing. =)
Web Reference: http://robweber.com
0 votes Thank Flag Link Sun May 31, 2009
Angie, May I suggest that you contact a local HUD 203(k) consultant in your area for clarification on all the guidlines of the 203(k).

Michael Grace
HUD 203(k) consultant
http://www.your203home.com
Web Reference: http://www.your203home.com
0 votes Thank Flag Link Sun May 31, 2009
Hi Angie,
My mortgage lender is actually doing a deal for me right now using the 203K program. My client told me that she had called a number of other lenders and noone would do the loan. Email Steve Bloom with A and N Mortgage at steveb@aandnmortgage.com. and he should be able to help you out.
good luck!
0 votes Thank Flag Link Thu Dec 11, 2008
Nancy is referring to what's called "buy & bail"

http://activerain.com/blogsview/707930/FHA-enacts-policy-changes
0 votes Thank Flag Link Fri Oct 10, 2008
Angie-
What's happening with your loan? Do you still need assistance?
email me back on my profile.
thanks
Maria Sabatini
Scovell+Sabatini Team
0 votes Thank Flag Link Fri Oct 10, 2008
Recently, due to many people purchasing properties at a reduced priced and then claiming
that the home they presently own will be rented have affected new lending policies at least for
time being. Many homeowners were claiming they were going to rent out their home then
would actual let their home fall into foreclosure, adding to our economic crisis. The last
FHA guidline in order for you to use rental income to contribute to you obtaining financing is
that you must have at least 25% of equity in your present home and if going conventional
that requirement is 30%.

We are in changing market try to keep updated with your local lender.
0 votes Thank Flag Link Fri Oct 10, 2008
Have you tried checking with another lender? Like Wells Fargo?
Web Reference: http://www.MariaSellsKC.com
0 votes Thank Flag Link Fri Oct 10, 2008
As a renovation specialist myself. I am not aware of a such change. If you're interested in obtaining financing I'd like to assist you with a 203k.



Will Addo
Wells Fargo Home Mortgage
willis.addo@wellsfargo.com
0 votes Thank Flag Link Thu Oct 9, 2008
Angie-
Are you working with a Buyer's agent?
One of my responsibilites when establishing a realtionship with a buyer is ensure that they have financing for their purchase. We work with Wells Fargo and they have a guarantee to close once you are given the loan committment. Last week Wells Fargo named the Chicago area a stable area so they are doing 95% LTV and FHA loans.
Please contact me on my profile so that I can assist you in your successful purchase.

Maria Sabatini
Scovell+Sabatini Team
Rubloff Residential Properties
0 votes Thank Flag Link Mon Oct 6, 2008
Angie

I would recommend you work with a trusted lender and they can give you an updated status on the current FHA loan rules. It is difficult to keep up with all the changes taking place and will continue until this market gets back on track.

Good luck!

Lucy Perna
0 votes Thank Flag Link Sun Oct 5, 2008
These new FHA guidelines are real. They recently put them in place to discourage "walk away home owners", or buy a home a lower priced home and walk away from the current one. They just want to make sure that you in fact would be able to cover whaterver mortgages you have with your income.
0 votes Thank Flag Link Sun Oct 5, 2008
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2015 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer