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Possible to buy beat up house with no construction/FHA 203(k) loan?

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greigmg

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I have my heart set on a house that has some issues.  The siding needs work, one wall is pulling away from the structure, and there are a couple holes in the interior ceilings.  No big deal.

I've been talking to lenders and brokers and they keep saying FHA 203(k) or construction/renovation loan.  The concern is the bank won't lend the money, there will be large costs to cure, etc. 

My question is how are people buying these houses?  There are gazillions of houses that don't meet the strict standards of the FHA.  This particular housed was purchased in 2006, and I know the damage didn't all happen in the past three years - how did the current occupant get a loan?

Anyone?  Is it possible any more to buy an old house free and clear without someone looking over your shoulder, forcing you to hire contractors, etc.?  I see this as a long term project where I do the bulk of the work myself, on my own schedule.

Thanks.
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June 02 - New Orleans
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Margaret Hickman, ABR, SRS, "kittenonkeys"

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I'm dealing with a short sale right now, and the mortgage originator in our office recommended I send my buyer to a locally owned bank with more flexibility.  I did that, and she will be getting a non-conforming loan of the type investors get.  The rigid FHA appraisal guidelines will not be an issue.  Of course, the interest rate will be higher, but when the work is done, it can be refinanced.  It will be worth more, so hopefully private mortgage insurance will not be needed.
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June 02
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Bob Lowery, "Bob Lowery"

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Yea, with those repairs...

Conventional tends to overlook the cosmetic things, but the more serious repairs are an issue with conventional, too.
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June 02
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nvchaz

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Is that true Bob?

I bow to your greater experience.

It seems a shame that people that want to do the work cannot find a lending facicility that will meet their needs.
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June 02
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Bob Lowery, "Bob Lowery"

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nvchaz, I don't think this person could even buy this home with a conventional loan.

greig, you will most likely need a rehab loan based on your description.  The only other way to buy this home free and clear with no one looking over your shoulder is by cash.
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June 02
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nvchaz

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Not only that:

I'm finally in escrow on a house that fell out on the pest inspection. They wanted a visqueen vapor barrier in the crawlspace.

I said OK no problem -- I'll buy 6mil plastic and shimmy into the crawlspace and spread it.  They said no, had to be a licensed contractor. So, I said OK, you pay for it then and they said yes and it will cost them $350 and a weeks delay in the closing. I could have done it in 2 hours with a $75 material cost.

Stupidity.
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June 02
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nvchaz

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I'd tried to buy a fixer with an FHA loan and they wouldn't approve it. I could have fixed the problems with two days work.

I think you have to hire a licensed contractor and have the work done within 90 days on an FHA rehab loan. No way am I gonna do that when I can do it myself for 1/3 the cost.

The only way you can do fixers is with a conventional loan with at least 10% probably 20% down. That really p*sses me off because there are a lot of people willing to really work to improve property. But I want to do it on my own terms and not have some contractor walk in and eat up all of my equity.

I guess the FHA thinks we are all idiots who can't fix our own homes.
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June 02
 

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