Hi Manfredo,

When you buy your house you will get only one loan - either the 203(b) or the 203(k). The standard FHA 203(b) loan is for a house that is in fine living condition. The 203(k) is used to purchase a home that you plan to rehabilitate and the construction costs are built into the loan. This loan will be structured as a 30 year mortgage so you won't need an additional mortgage. The 203(k) is great, but the interest rate will be a little higher than the standard 203(b).

It seems like you are planning to rehab the home and the 203(k) is a nice options. A 203(k) specialist will be able to walk you through the process. Even through my mortgage company can't do a loan in VA, I'd be happy to speak with you to help guide you through the process - (610) 660-4710. Good luck.

As by my past experience bottom lines

1.One Loan is given at the time of settlement as a normal loan BUT before that
a) repair estimates are taken from 3 different contractors to define exact repair amount
b) repair money is escrowed with title company or third party and is released only to contractors against invoices and repairs and can not be released to homeowner at any point to do repairs or otherwise.

2. many lenders dont want to do it because it can take LONG time to close for them with a LOT of paperwork and may be personal choice.

But still I am a Realtor not a Lender so you should clarify it from the right resource. It is just as I have understood them in the past and present while helping clients.

Monika