Best of luck on your purchase and addition.
Contact us today via: firstname.lastname@example.org
Dr Cheryl Schantz
United Loan Finance
San Jose, CA, USA
NMLS # 6395
Financing Kentucky One Home at a Time
You will need a 203k expert team to help with this type of project: a consultant-contractor-lender. You can do a Map Search to find one in your area at http://203kexperts.com/map-search/ so you can see who the consultants are in your area. There is also a good FAQ section to help you understand the program guidelines as well.
I would suggest that you start with a 203k Consultant to help define your project and personal needs along with FHA required repairs. The 203k Consultant will then prepare a detailed specification of repairs and a cost estimate. Part of that service will be giving you a Contractor Biid Package so that you can give that to some contractors and obtain a couple of bids. This allows you to compare apples with apples.
There is more to it than can be answered here, but the answer is: Yes! You can definitely use the FHA 203k program to do an addition. Low interest rates, low downpayments and a consultant to help you from start to finish.
You will need to use a lender that does FHA loans, most do.
Here are some more specifics.
You may borrow up to $30k more on the purchase price of this property with a transaction called a 'Streamline' 203k. It requires the same amount of documentation, but will not require the need for a licensed contractor or 203k counselor.
Over $30k, here is what will be involved:
-architect's plans for addition complete with a detail cost of materials being used (ie; windows, carpet, fixtures, etc (pay for plans to architect up front)
-apprasal utilizing the architect's plans to obtain a finalized value. You may borrow up to 96.5% of that completed value.
-intial work (demo, framing, foundation, etc) must be paid prior to the initial draw. These costs must be covered by contractor or yourself or other party as FHA will only fund completed phases (reviewed by FHA consultant)
-your work must be completed by a licensed contractor which cannot be any titled owner.
-work must be reviewed by the 203k contract consultant
Work can include additons and rehab. It may include rehab on a pool but cannot be used to build a pool.
Work may also include landscaping limited to demo and installation of irrigation.
When you write your contract, you will purchase the home at the price you bid, but the loan amount will be based upon the architect's plans and the appraised value of the finished project.
Your seller must be willing to work on an extened close of escorw date as the plans will take some time to complete.
Also, you must qualify for the final loan amount.
This is a great way to get very inexpensive construction financing without having to front load 30% investment from you!
Good luck. Sounds great!