Joanie, Home Buyer in Norcross, GA

FHA 203k loan to rebuild on existing foundation?

Asked by Joanie, Norcross, GA Sun May 17, 2009

I found a nice property with an old house that is currently "unlivable". The foundation seems fine, and I wanted to know if I can use the 203k loan I pre-qualified for to tear down & build on top of the current foundation?

A local loan person said it couldn't be done, and that there is a $35k limit on funds.

What gives?

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Michael Nevi…, Agent, Atlanta, GA
Mon May 18, 2009
the 35K limit does not sound like a traditional 203K loan, it sounds like the 203 STREAMLINE - which doesn't allow you to address structural issues - it's more or less for cosmetic repairs.

The traditional 203K is based on After Repair Value Appraisal. I'd suggest a few lenders with Wells Fargo or Flagstar that can handle a full 203K loan - be careful the rates are a little higher & so are the closing costs for a 203K

Otherwise you're looking at a C.P. loan and a much larger % down
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Dana Schuster, Agent, Slidell, LA
Sun May 17, 2009
That information is correct to the best of my knowledge. What you would need would be basically a new construction loan.
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