Financing in San Jose>Question Details

EC, Both Buyer and Seller in Santa Clara County, CA

203k loan for square foot addition?

Asked by EC, Santa Clara County, CA Mon Jun 11, 2012

Im looking to buy a property that needs slight upgrades/repairs but is definitely in need of more square footage. Its a 2bd/1bth - 900sqft. I would like to buy it and then add about 600 sqft. Can you do this with the 203k loan or is that just for repairs? Other options to get this done?

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YES!!! You can use the 203k loan to add square footage as well as repairs, renovation, rehab and so on...


Best of luck on your purchase and addition.
1 vote Thank Flag Link Mon Jun 11, 2012
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0 votes Thank Flag Link Thu Nov 15, 2012
If the other homes in the neighborhood are about the same size you may not be able to do it, nor should you. Real estate is not a vacuum,

Jim Simms
NMLS # 6395
JSimms@cmcloans.com
Financing Kentucky One Home at a Time
0 votes Thank Flag Link Thu Jun 14, 2012
You can certainly use the FHA 203k for room additions along with other health, safety and structural repairs. Actually the list of repairs or renovations that you CANNOT do is much shorter: No hot tubs, swimming pools or other luxury items.

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.

Best wishes,
0 votes Thank Flag Link Thu Jun 14, 2012
Absolutely! For the room addition (and any repair "structural" in nature) the remodel will require the assistance of a 203K Consultant/Inspector and include at least $5,000 dollars in repairs (a room addition will most likely cost more than $5,000). Find lenders, agents, contractors and consultants at this handy online resource where you can register for updated information.
Web Reference: http://www.203kexperts.com
0 votes Thank Flag Link Thu Jun 14, 2012
Yes you can but there are rules. Here is a link for 203k .... http://portal.hud.gov/hudportal/HUD?src=/program_offices/hou…
You will need to use a lender that does FHA loans, most do.
0 votes Thank Flag Link Tue Jun 12, 2012
EC: As you can see this is possible with the 203k.
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!
0 votes Thank Flag Link Tue Jun 12, 2012
Thanks for the info Claudia! The seller is looking for a fast close so I'm afraid if we ask for an extend close they may not accept our offer. Do yo know if its possible to get the 203k loan and start the construction at a later date?
Flag Tue Jun 12, 2012
You will want to work with a lender who is familiar with the 203K requirements.

Have an amazing day!
Web Reference: http://www.terrivellios.com
0 votes Thank Flag Link Mon Jun 11, 2012
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