HUD 203(k) Rehab loans

Does anyone have any experience with 203(k) financing? Is it a difficult and drawn out process? Do they have an anti-flipping time provision? Any other pros or cons you can think of would be appreciated.

Bill Schroeder
Tulalip WA

As I’m sure you are aware, any gov. backed loan is going to suffer from what I call “bureaucratic inertia”.

But, the good news is that with their backing it helps get the deal done, and makes it a more doable loan for the bank.

“Do they have an anti-flipping time provision?”—I think the fact that the 203(k) is for owner occ properties only should answer that questions. Although, who are they to say when you can and can’t sell your house?

Got these from the HUD website:

  1. What is the definition of a First-Time Homebuyer? A single person or an individual and his or her spouse who have not owned a home (as a tenant in common or as a joint tenant by the entirety) during the three years immediately preceding the date of application for the 203(k) loan. Any individual who is legally separated or divorced cannot be excluded from consideration, because the three-year waiting period does not apply, provided the individual no longer has an interest in the home.

  2. Is there a limitation on how many properties a person or organization can have in any area of the community? Yes. A borrower can have not more than seven (7) units within a two block radius of the property they want to purchase. However, if the property is in a local community area that has been designated for redevelopment or revitalization, then this seven unit limitation does not apply.

Only two things that are close to what you’re asking.

Check out

to find out more information on 203(k).

I did what was called either the 203(s) or streamlined 203(k) for my primary residence and was able to buy a foreclosed home and get a lot of things financed into the loan (ie deck, new furnance/ac, etc…). ( i even heard that you can finance appliances into the loan)

Overall i like the program it is just the timing and the hoops that you have to jump through to get the deal done that are the disadvantages.

Another disadvantage (at least) with the lender i dealt with was that they wanted me to submit bids for every thing that i wanted financed into the loan which wasn’t the problem. the problem was that there were several situations where i had to reject bids that were several thousand lower than bids that i ended up going with because the lender had a requirement that the contractor have been in the better business bureau for at least a year so i ended up overpaying for several items.

all and all though i would do the program again because i was able to capitalize on state of the foreclosure market and get a nice home in a nice neighborhood with updated features.

I’m familar with the 203k loan process—there is an extended loan processing element to the loan (it typically takes about 45-60 days to close), but the pros far outweigh the cons (the 203k is by far the best rehab loan for owner occupied transactions—the highest ARV allowance, no money down required, advancement of repairs at closing, ability to go NO DOC/No Appraisal using a streamline refinance once completed, etc.).


Scott Miller

Sorry for digging up an old post but this was the most relevant one I could find among the archives.

I am trying to find more information about the 203(K) loan process. I am currently interested in a HUD foreclosure, 4-units, to be used as a primary residence. The listing price is $64,000 and it is eligible for Streamline K. However, although eligible, it is only eligible up to $35,000 and the stated as-is value is $80,000. Is the listing price for a foreclosure a BS number?

The 203(K) was setup to allow financing for both the property as-is AND cosmetic repairs. However, in this scenario the loan amount would not cover both. Can the 203(K) loan be used in conjunction with another FHA loan?

Any advice would be appreciated. Thanks, Ben