Profile picture for user9709803

Home not Eligible for FHA 203k Loan

Hi everyone... thanks to all who are taking the time to answer my question. I have found a property that I wanted to put an offer on. There is some minor repairs and renovation that I wanted to do, so as a first time home buyer through my lender... (pre-approved and all) we were going to go through the FHA 203k loan. I need about 10k to renovate. I just found out this property does not qualify for that kind of loan. It is a 3br 2.5ba condo for 80k. Can someone please give me some insight as to why it is not qualified, as well as maybe some other options I might be able to do instead? This property is in Austin Tx.

thanks
j
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
June 17 2012 - Austin
We think we've answered this question for you!
  • Be a Good Neighbor. Be respectful and on-topic. No spam or self-promotion! See our Good Neighbor Policy.
 
 

Answers (10)

Best Answer
Even rehab loans require condo project approvals as well.  If Fannie or Freddie or FHA doesn't like the condo, you can't use any of their products (Conventional Reno is a Fannie Mae product, 203k is FHA).  The only variance on that is a Homepath Renovation loan but I'm guessing this isn't an eligible property or you'd have mentioned that already.

It sounds like the reason this deal died is because you have a newbie loan officer when it comes to rehab lending.  With very limited exceptions, you _can't_ use a 203k to rehab a condo (all Renovation Specialists know this and if they don't, they're not specialists).

The way you're supposed to do a condo rehab is to use a conventional renovation loan with a 5% down payment (assuming it'll be owner occupied) and a bit higher score than a 203k requires.  These loans can also be used for investment properties as well.

I have many posts about rehab lending, feel free to browse through them or if you need immediate questions answered,my contact info is in my profile.  If it's not urgent, feel free to add them here for the benefit of others.

P.S.  I loooooove Austin, I almost moved there seven years ago before I met my wife.  :)
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
June 18 2012
Bounce your idea with your buyer agent, but I would do just that. If they owe $80000, they will have to pay closing costs and commission, $85000 may be appealing to them. Leaving a vacant home is inviting copper chasers.
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
June 24 2012
Profile picture for user9709803
Thanks again for all your answers! its great to have this kind of outlet. Update: I decided to put an offer on the house and do the renovations the old fashion way. Time and saving money. The property was listed at 105k but the market analysis for the area it was waaaaay over priced. Only one house sold in the last year and all were in the 72k to 79k price range. So offered 80k. They quickly counter offered with 95k, 10k less then asking. I had my agent explain that there are repairs needed that are not included in the renovation. AC repair and un even flooring issue. The seller stated that they payed 100k in 2006 and could not go lower then 95k for them not loosing any money. They are stating that any repairs is minor and they are not going to bring any cash to the deal. ie closing cost ect ect. I know that they owe 80k left on the loan and the market is not what it was in 2006. They are moving to Miami at the end of the month and thats the reason for selling. I had my AC guy look at the property and he concluded it does need rehab and gave me a estimate of cost. I guess my question is now. is this deal done? i was thinking of offering 85k submitting a detailed report on the AC repair and that i will cover the repairs. Any advice on handling un motivated sellers? thanks again all

  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
June 24 2012
You should ask that question to the lender who told you that it would not work.  Maybe it is a condo that is not FHA certified? Have you tried a conventional loan?
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
June 24 2012
Profile picture for user9709803
Thanks again for all the advice. Here is a bit more information: I have been working with a Realtor, the property did not state any information that it was not FHA approved or non approved. we found out after the offer was made. I am qualified for FHA as well as a conventional Loan, and I have been reading there are such things as Conventional Renovation Loans as Cindy Stated, but I guess my core question is which ones are our there? As my only option is to go conventional. any options? I have been working with different lenders as i have tried to buy other properties. so one lender specializes in foreclosures, one specializes in short sales, one specializes in FHA 203k. 

I also heard about the Fannie Mae My community loan, but is there a Reno Loan that can be tied to it

thanks again for all your help
j
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
June 18 2012
There are a variety of reasons a condo may not be FHA Approved. You should contact the condo management office and ask "when was the last time they ever completed an FHA Condo Questionairre".
You might also get a copy of the questionairre from your lender and ask the condo management office to complete it so you can determine what the issue might be. It could range from the % ownership of investor units versus owner-occupied, to delinquency rate for condo fees, pending lawsuits, etc.

It's worth a try if you really want the property but don't have the ability to get a conventional loan. Getting "spot approvals" is almost impossible these days, but look into why it is not on the list. It could be that you are just one or two owner-occupied units away from approval.

Good luck,
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
June 18 2012

I don't know what your credit situation is, but there are conventional renovation loans available. If the condo is not FHA approved that will be your only choice. Speak to some additional lenders to see if you would qualify for a conventional reno loan....most require 5% to20% down.

This is why the investors get most of the steals on the market, one has to have a down payment and/or money to do the needed renovations.

I bet David has egg on his face if you are one of the many people who is working with a Realtor and still has questions or problems.

  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
June 18 2012
If you were working with a Realtor, they could have saved you the time searching to find a property that won't qualify for FHA.
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
June 18 2012
Profile picture for user9709803
thanks for the reply... but is there another option available to do renovation and home loan in one? thanks again

  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
June 17 2012
In all likelyhood, the condo complex is not FHA approved.  Therefore, you cannot get an FHA loan for the purchase.
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
June 17 2012
 
Related Questions
As a buyer I want to back out from buying the house. What actions can the seller take against me?
Profile picture for Buddy Quaid
Latest answer by Buddy Quaid
6 days ago | 12 answers
Moving to Austin
Profile picture for Frank Noshari
Latest answer by Frank Noshari
April 28 | 5 answers
What does it mean when there's an absurdly low Make Me Move price?
Profile picture for Tom Ashworth
Latest answer by Tom Ashworth
March 07 | 3 answers
Is Oak Wilt Supposed To Be In Seller's Disclosure
Profile picture for Doug Crane
Latest answer by Doug Crane
February 27 | 6 answers
What can I do to get more (or better) quotes for my loan request ZR-GTQCNTC?
Profile picture for Lowell Sterling
Latest answer by Lowell Sterling
February 10 | 1 answers
Mortgage Rates
 
Be A Good Neighbor

Zillow Advice depends on each member to keep it a safe, fun, and positive place. If you see abuse, flag it. More on our Good Neighbor Policy.

Homes for Sale
  1. 2808 Hunnicut Ct, Austin, TX Home For Sale
    2808 Hunnicut Ct, Austin, TX 78748

     For Sale: $348,000

    • Beds: 3
    • Sqft: 2031
    • Baths: 3.0
    • Lot: 7666
  2. 7705 Haggans Ln, Austin, TX Home For Sale
    7705 Haggans Ln, Austin, TX 78739

     For Sale: $625,000

    • Beds: 5
    • Sqft: 4094
    • Baths: 4.0
    • Lot: 12946
  3. 10500 Milky Way, Austin, TX Home For Sale
    10500 Milky Way, Austin, TX 78730

     For Sale: $1,539,200

    • Beds: 5
    • Sqft: 6350
    • Baths: 6.0
    • Lot: 43560