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203k Loans and procedures

I am a first time home buyer planning on buying a fixer upper in Jersey City, NJ and was planning on getting a 30 yr fixed FHA Mortgage for around 400K and at the same time apply for 203k loan for another 300K(this would be used to gut the place and remodel n extend the building as either a 4 family home or extend the building and use it as a mixed used property) Do you think I can apply for both these loans together? I know that I have to get a 203k Consultant, Contractor who is willing to work with 203k loans and Architect. I am wondering what should my approach be, should I go to the lender and ask to refer me to consultant n contractor as it would be a much smoother process if the lender n consultant n contractor have working relation?

Info on my Credit n income
Credit - 640-660(Borrower), 700-720(Co Borrower)
Income- $180,000/year
Outstanding Debt - less than $1000/month
Projected income if I get the loan n convert it into a 4 family - $4000/month


Just to summarize following are my questions.

1) Can I apply for both 30YR FHA Mortgage (400K) + 203K Update loan (300K) together?
2) Can someone who has experienced this scenario help me in laying out a plan as in what's first,second n so on?
3) Anyone have any contacts for good FHA 203K lenders, Consultants, Contractors n Architects?

Thanks one n all.

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February 04 2010 - Jersey City
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Answers (15)

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I got an approval for 850K @ 5.5 % with 1.5 pts. Good/Bad rate for 203k? Is there a way to put in a 203k loan request on Zillow to compare rates?



Thanks
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February 15 2010
JerseyCity,

The project is complicated so you need to talk with a local expert.  The store front is going to impact the project and may make it inelligble for FHA fiancing depending on the square footage.

I would have to double check but a few additional obstacles:

1. Renovation funds cannot be used on improveing the store front
2. If the Square footage of the Store exceeds 25% of the total square footage it is likely a deal breaker.

I would have to double check both those guidelines but they are questions you need to ask your loan officer.
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February 10 2010
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I am sorry I mistyped. Currently it's a 2 family house and I plan on extending and making it into a 4 family or 3 family + a store front. Again my question is

1) Would the projected income be taken into consideration when deciding on the Maximum loan I could get under 203k and if there is an online calculator?


Thanks

 

 
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February 10 2010
That all could be difficult. 6 units, same lot, not good!
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February 10 2010
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One more follow up question. Is there some kind of calculator that can tell me how much of 203K loan can I qualify for? Most of the Mortgage calculators that I have used tell me that based on my income and current debt I qualify for 650K. However the 203k loan that I want with all the construction that needs to happen would be nearly 900K, and this would have a 4 unit rental + a duplex where I would live. 

Does anyone know if the projected income from these 4 units would be included in deciding how much 203k loan can I qualify for ? 

 4 units of the projected size brings in anywhere from 4-6k/month in my neighbourhood.


Again thanks for all the replies
 
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February 10 2010
Justin,

I think the nationally certified threw me off and the fact that you are in Cali...at least I think you are in Cali.
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February 05 2010
Here's a link to some NJ names, and numbers, in a spam sandwich.
 
203K Contact Names and Numbers

The HUD Consultants length of experience is probably the key. The program is slightly bureaucratic, so repetition with it, is crucial, if your time is of value to you.

The HUD consultant will likely be an appraiser, or possibly a retired contractor or building inspector type individual. A cross, between those two types, would be ideal.
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February 05 2010
For your knowledge, that consulant web site i directed him too referance New Jersy and New York territory.
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February 05 2010
Don't over refine your search in NJ there are 70 Consultants some are no longer current.  Start with NJ and then start calling consultants based on distance.  After you talk with a few I will bet you will get a feel for which ones are the ones you would want to work with based on how they field your questions.  You will also get a good feel for them when you call the folks they refer you too.

I, unlike Justin, feel very strongly that for these loans to go smoothly you need to work with a team of local professionals.  It looks like Justin's referral is for a Consultant in NY and may in fact be local enough to be of assistance depending on where in NY and Where in NJ you are.  No way I would ever use a NY Consultant for a property in MA.  I will use the Consultant I use in MA for RI, CT & NH provided it is not too far for them to drive. 

Just my .02
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February 05 2010

this person is active and covers NJ.  link  

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February 05 2010
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How do I know if a 203K consultant is any good?

Andrew, I checked the link for consultants listed in my area. However they all show a termination date that is in the past. Is the HUD website updated, does anyone know?

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February 05 2010

In all honesty I would start by finding a good 203K Hud Consultant, they will know what lenders and loan officers write k loans regularly as well as the contractors that are familiar with and have worked with K loans in the past. 

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February 05 2010
I am not exactly a 203K Specialist, but I was in the Special Olympics.

What you need is, a 203K Specialist, Specialist, to consult with, about how to find a Local 203K Specialist.

You can do the general thing you are contemplating. Buy a unit, expand to multi-family, and/or include mixed use. It seems maybe you already know this.

As has been said, you don't apply for two loans. 203K is one loan, used for purchase, and then, renovation. This is what makes the product work.

A good 203K Lender will help you with the "plan". But expect to pay for it. This is not an adventure you want to take with the "lowest rate, lowest fees" guy.

There must not be a Jersey 203K Spec. following the "free advice, as way to riches" plan. I suspect that googling "New Jersey", and "203K", would result in both Contractors, and Lenders to inquire with.

A "good" Contractor, who is used to doing 203K jobs, would "know" a Lender. A Lender may be less willing to "recommend" Contractors. However you find the duo, finding some that have worked together before, certainly adds value to the equation.

Good Luck. Fist pumps.

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February 05 2010
You need to find a local 203K loan specialist.  It would be crazy to try and work with a 203K specialist that is not local...These loans are complicated enough.
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February 04 2010
you have the process really confussed, the FHA 203k loan is a single, first position loan with the cost of allowed renovations inculded in the loan amount- basicly purchase price + cost of renovations = total loan amount. FHA does have loan amount limits. you need to check hud site for the maxmium loan mount in your county - link
this is a CA site by a business partner, it does have alot of usefull information of the process, etc. - [content removed by moderator]
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February 04 2010
 
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February 15 2010 | 15 answers
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