{"id":3829,"date":"2016-04-26T09:51:05","date_gmt":"2016-04-26T09:51:05","guid":{"rendered":"https:\/\/www.movoto.com\/foundation\/?p=3829"},"modified":"2016-04-26T09:51:05","modified_gmt":"2016-04-26T09:51:05","slug":"fha-203k-loan-10-answers-to-the-questions-you-should-be-asking","status":"publish","type":"post","link":"https:\/\/www.movoto.com\/blog\/fha-203k-loan-10-answers-to-the-questions-you-should-be-asking\/","title":{"rendered":"FHA 203k Loan: 10 Answers To The Questions You Should Be Asking"},"content":{"rendered":"<p>If you are a low income borrower, then the Federal Housing Administration (FHA) is most likely your best friend. Getting into a home would be impossible for around 90 percent of current homeowners if not for the FHA. Here are the top 10 questions that you should be asking about the\u00a0<a href=\"https:\/\/www.movoto.com\/\">FHA 203k loan<\/a>\u00a0if you are considering it for yourself.<\/p>\n<p><em><b>1. Am I still responsible for a monthly mortgage insurance\u00a0payment if I have 20 percent for\u00a0the down payment?<\/b><\/em><\/p>\n<p><img decoding=\"async\" style=\"width: 600px;\" title=\"fha 203k loan\" src=\"https:\/\/s3.amazonaws.com\/movoto-foundation\/Foundation+Articles\/2016\/03\/fha-203k-loan-10-answers-to-the-questions-you-should-be-asking\/fha-203k-loan-10-answers-to-the-questions-you-should-be-asking-1.jpg\" alt=\"fha 203k loan\" \/><\/p>\n<div class=\"Source\"><em>Source: picserver.org<\/em><\/div>\n<p>Ever since 2014, FHA rules switched to make the mortgage insurance payment required no matter how large of a down payment you put on a property using the 203k\u00a0loan program. The purpose of the 203k\u00a0program is to allow a buyer enough leverage to move into a conventional loan. After that, the mortgage insurance payment may be waived. Look at refinance options once your equity in the property becomes substantial enough.<\/p>\n<p><em><b>2. Do I have to make the monthly\u00a0payments on the loan while the home is getting renovated?<\/b><\/em><\/p>\n<p>If you have a full 203k\u00a0loan, you may be able to push up to six months of mortgage insurance, home insurance, property tax escrow, and mortgage payments into the loan as long as the property cannot be considered inhabitable. The FHA consultant makes the sole decision on whether a property is inhabitable or not.<\/p>\n<p><em><b>3. Do I have my choice of contractors if I am using a 203k loan?<\/b><\/em><\/p>\n<p>Although the borrower chooses the contractor, that contractor must validated by the FHA for his license. There must also be a current workman&#8217;s comp policy in place. The contractor will usually be required to bring references and a credit report, and his cash flow will be checked.<\/p>\n<p><em><b>4. Does my contractor get the rehab funds directly from the lender?<\/b><\/em><\/p>\n<p>The check that the contractor receives is a two-party check with the other party being the borrower if the program is a limited 203k\u00a0program. On a full 203k, no advance is sent to the contractor. Contractors receive the paperwork that authorizes the payment after the first phase of work on the property; however, up to five phases of work may need to be completed before payment is actually given.<\/p>\n<p><em><b>5. Can I negotiate some or all of my closing costs onto the seller?<\/b><\/em><\/p>\n<p>A seller may provide a buyer with a credit up to six percent\u00a0of the price of the home in order to cover the closing costs of the buyer. There is also a special grant known as a <a href=\"https:\/\/www.movoto.com\/foundation\/finance\/fha-203k-loan\/\">PowerSaver grant<\/a> that can help a buyer to pay his closing costs. In most cases, the onus of paying closing costs is on the buyer and has very little to do with the loan program. Buyers are advised to maintain a cash reserve in order to facilitate the closing process.<\/p>\n<p><em><b>6. Can I build a completely new house with the\u00a0203k loan program?<\/b><\/em><\/p>\n<p><img decoding=\"async\" style=\"width: 600px;\" title=\"fha 203k loan\" src=\"https:\/\/s3.amazonaws.com\/movoto-foundation\/Foundation+Articles\/2016\/03\/fha-203k-loan-10-answers-to-the-questions-you-should-be-asking\/fha-203k-loan-10-answers-to-the-questions-you-should-be-asking-2.jpg\" alt=\"fha 203k loan\" \/><\/p>\n<div class=\"Source\"><em>Source: static.flickr.com<\/em><\/div>\n<p>Neither a streamlined nor a full 203k\u00a0program may be used in the construction of a completely new residence. However, the 203k\u00a0can be used to rebuild from a foundation that has already been laid down. In this way, outdated residences may be updated by a 203k\u00a0program as long as the foundation stays the same. Many people use the 203k\u00a0loan program to convert single\u00a0family housing into multi unit housing that can accommodate a rental income.<\/p>\n<p><em><b>7. Can I renovate an apartment building with the 203k loan program?<\/b><\/em><\/p>\n<p>Apartment buildings with up to four units may be renovated using the <a href=\"https:\/\/www.movoto.com\/foundation\/real-estate-terms\/\">203k\u00a0loan program<\/a>. If an apartment building has more than four units, it can only be downsized to four units or less\u00a0using the money from this program.<\/p>\n<p><em><b>8. Can I renovate my current house with the 203k loan program?<\/b><\/em><\/p>\n<p>As long as the foundation of the property remains the same, the 203k\u00a0loan program can be used to renovate a current house. Any rebuilding expeditions, expansions or improvements are eligible. These improvements will be done as a mortgage refinance, and if there is no mortgage on the property, the 203k\u00a0will take the place of a mortgage.<\/p>\n<p><em><b>9. Can I renovate a multiunit property with the 203k loan program?<\/b><\/em><\/p>\n<p>As long as a particular zoning area allows for commercial use of a building, the 203k\u00a0loan program can be used to renovate any building with a maximum of four units. The program may also be used to convert a multiunit building into a single family household. However, no matter what, the building must house the owner as a resident,<\/p>\n<p><em><b>10. What about mixed use housing?<\/b><\/em><\/p>\n<p><img decoding=\"async\" style=\"width: 600px;\" title=\"fha 203k loan\" src=\"https:\/\/s3.amazonaws.com\/movoto-foundation\/Foundation+Articles\/2016\/03\/fha-203k-loan-10-answers-to-the-questions-you-should-be-asking\/fha-203k-loan-10-answers-to-the-questions-you-should-be-asking-3.jpg\" alt=\"fha 203k loan\" \/><\/p>\n<div class=\"Source\"><em>Source: static.flickr.com<\/em><\/div>\n<p>Mixed use housing can also be renovated using the 203k\u00a0loan program as long as the housing does not create more than four units within the building.<\/p>\n<h2>2 Point Highlight<\/h2>\n<p>If you have a full 203K loan, you may be able to push up to six months of mortgage insurance, home insurance, property tax escrow, and mortgage payments into the loan as long as the property cannot be considered inhabitable.<\/p>\n<p>These improvements will be done as a mortgage refinance, and if there is no mortgage on the property, the 203k\u00a0will take the place of a mortgage.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>If you are a low income borrower, then the Federal Housing Administration (FHA) is most likely your best friend. Getting into a home would be impossible for around 90 percent of current homeowners if not for the FHA. Here are the top 10 questions that you should be asking about the\u00a0FHA 203k loan\u00a0if you are considering it for yourself. 1. Am I still responsible for a monthly mortgage insurance\u00a0payment if I have 20 percent for\u00a0the down payment? Source: picserver.org Ever since 2014, FHA rules switched to make the mortgage insurance payment required no matter how large of a down payment [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":3830,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[243],"tags":[],"class_list":["post-3829","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mortgages-loans","post--single"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.6 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>FHA 203k Loan: 10 Answers To The Questions You Should Be Asking<\/title>\n<meta name=\"description\" content=\"The FHA 203k loan is one of the best for low income borrowers who need help.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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