203K loan question

stephjonesAugust 6, 2011

Can a 203K loan be used to add an addition on to a house? We want to purchase a home that needs updating. However it is a small house and we would like to bump out the back to open it up and renovate that whole area, with a new kitchen, etc. Can you do this type of thing with a 203K loan? Or is it only used to make improvements to the structure as it is now?

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melody-s

I don't think so. I have been researching different loan types and according to an article I found on about.com this is not permitted.

    Bookmark   August 6, 2011 at 8:22PM
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stephjones

melody...I've been researching also today and I believe you may have read about the "Streamlined 203K". This is a little different than a regular 203K, easier process, less paperwork I believe. But from what I have been reading we could do a more extensive remodel, just need to do a regular 203K.

    Bookmark   August 6, 2011 at 9:12PM
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ncrealestateguy

The EEM 203k goes up to $10,000 and is for Energy Efficiency Improvements.
The Streamlined 203K is for renos up to $35,000.
The standard 203K is for more than $35,000, and additions are allowed.
I believe an addition would be allowed under the Streamlined version too. Best to ask a lender who does a lot of these.

    Bookmark   August 8, 2011 at 12:22PM
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logic

The streamline 203K has a lot of hoops to jump through, so research it thoroughly on the FHA site. Additions are ineligible. You also can't do the work yourself unless you can demonstrate skill and experience. The work must be completed in six months (good luck on that one).Contractor bids must first be submitted to FHA along with detailed plans, permits, etc.
Need I go on?

Here is a link that might be useful: Streamlined 203K

    Bookmark   August 9, 2011 at 1:18AM
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kwaltonucf

Yes you can do a room addition with an FHA 203k Standard loan but not the 203k streamline. The key here is to get a contractor who is familiar with working on this loan. Go to 203k contractors.com and find one. This will save you many headaches. Most lenders are not allowing do it yourselfers anymore, just too many problems. This is a great way to go to add repairs/remodeling into one low fixed rate loan. Most Realtors don't understand the loan either, so they usually say not to use it. Do your research, use an experienced contractor and go for it.

Here is a link that might be useful: www.203khomeloanrehab.com

    Bookmark   August 9, 2011 at 3:48PM
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Mercymygft

So we met with the lender yesterday, he seemed pretty knowledgeable of the 203K. He didn't make it seem like that big a deal, just more paperwork, etc. He said that if everyone involved did what they are supposed to do...no problem. So now we just need to make sure the contractors we had come look at the place are familiar with the 203K and are to work with us with this type of loan, and then need to pick one. Actually we already know who we want to work with, just need to make sure he is ready to work within the confines of the 203K.

    Bookmark   August 13, 2011 at 7:30PM
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