Help me with 203K loans. Say I buy a house for $100,000 and it needs repairs of $35,000. Do I need to get a loan for $135,000 or $100,000?

Asked by Todd Zietlow, Saint Louis, MO Fri Feb 15, 2013

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Patti Click’s answer
Patti Click, , Baltimore, MD
Fri Feb 15, 2013
Hi, Todd!

I'd be more than happy to go over specifics with you on a 203k loan personally. I am with USA mortgage, and work with a lot of 203k loans.

To give you an overview, a 203k loan is a type of FHA mortgage. You need a 3.5% down payment of the total "acquisition" cost. In your example, the total acquisition cost would be about $135,000. When you go to settlement, the new loan would be for the $135,000 less down payment amount of 3.5%. You then get the $35,000 repair cost dispersed to you and your contractor as the repairs are completed.

Hope that helps answer your question!
1 vote
Can this type of loan be used to purchase a foreclosure that needs rehab and will be a investment property (I want to hold long term and rent it out)?
Flag Thu Feb 28, 2013
Brian Nguyen, Mortgage Broker Or Lender, Mission Viejo, CA
Mon Feb 24, 2014
203K loans can be a little complicated when compared to regular home loans. These types of loans can cover the costs of the house along with the costs of repairs. So in your scenario the loan would be for $135,000. This is a great loan to consider in your situation but it can get more complicated with more paperwork when compared to a regular home loan.

Well I hope this helps! If you have any further questions or if you need a loan, feel free to contact me. Also, if you found this helpful please leave me a recommendation if you can!

Good Luck!

Brian Nguyen Sr.
Mortgage Banker
NMLS # 659743
Phone: 949.667.2887
0 votes
Aaron Cole, Mortgage Broker Or Lender, Creve Couer, MO
Tue Aug 27, 2013
I have noticed that it helps to go with a company with a good/great track record with 203k loans. There are little details that other companies can miss because they dont do them as often. With anything, ask questions (like here) and do your research.
0 votes
Thomas Young, Home Buyer, Phoenix, AZ
Fri May 24, 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 for more information.
0 votes
Sebastian Ba…, Agent, Clayton, MO
Tue Mar 19, 2013
The 203(k) loan is a combined purchase+fixup loan that allows you to buy as-is with money in the bank for the rehab. There are loan limits in place, and there are streamlined versions that greatly simplify the process if the rehab is going to cost $35,000 or less. I have helped close many a purchase with a 203(k) loan, so ask away if you have any concerns.
0 votes
Russ Ravary, Agent, Commerce Township, MI
Fri Mar 8, 2013
You would be getting a loan for a $135,000. The cost of repairs is added into the loan amount.
0 votes
Lisa Rozier, Agent, Saint Louis, MO
Fri Feb 15, 2013
The loan would be for the full amount Todd. The rehab amount will be provided in installments as repairs are being made. If you need an agent to help you give me a call. I'm happy to help guide you. USA Mortgage is a goood source for 203k loans. Good Luck to you, Lisa Rozier Realty Executives of St. Louis
0 votes
Dale Weir, Agent, Chesterfield, MO
Fri Feb 15, 2013
Patti is correct - 203k loans are a great way to buy a home that needs work, but they do need to be identified when you submit the offer on the home and the timelines need to be set up carefully to accomodate the 203process

You really should sit down with someone early on to discussthe process
0 votes
Tom Kennedy, Agent, St Louis, MO
Fri Feb 15, 2013

Listen carefully to Patti. She knows what she's talking about and can be a great help to you.
0 votes
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