Can I Use the FHA 203k Loan to Flip a Home?

Can I Use the FHA 203k Loan to Flip a Home?



mortgage minute i'm dan boyle I'm here today with Joe Dailey Joe is our resident expert on the 203k loan program we've heard the term flipping foreclosures you've been by our cheap house do a few fixes and sell it people are making money off that but if I'm looking to buy a house as an owner owner-occupied I want to live here but I'm only gonna be here for a few years it's kind of a first step house can I still do that is there a minimum time I have to be in the house with us yes HUD does not want people to use FHA financing to acquire rental property or to flip homes I think the definition of flipping homes is probably more short-term than what you're talking about when you say buying a home fixing it up and per say flipping it or selling it in three years that is probably not a definition of flipping flipping would be buying it in March and then selling it by October for a profit that's you know unreasonable almost there's nothing gets the law you know there's nothing against the law that says you can't buy housing stock and and sell it for a profit flipping is really a term used for investors where investors are buying home for let's say 40 putting ten of ten thousand dollars of paint and carpet and making it kind of pretty and and then finding a way for it to praise and sell for a hundred where it really wasn't justified and then you have an owner-occupant come in buy the home for a hundred realizing that and years gone by that the home was never really worth a hundred but less so flipping is really not an economy friendly solution to a lot of housing stock but then again buying housing stock fixing it up and you Dan get to realize that a lot of these properties have good buys right now the average foreclosure sells thirty eight percent below what the average market value is even if you needed 25 percent to fix the house up okay so you're buying housing stock 62 cents you know on the dollar you might only need twenty or twenty-five cents on the dollar to fix it up creating instant equity for the buyers once all the repairs are so a lot of good buys out there right now why not choose a 203k loan – to financing the repairs create yourself some equity position so when you do sell in a couple of years you've got a nice down payment for your second home the third oh yeah so it could not just a rehab loan or renovation alone but it's kind of an instant equity loan it's an equity loan right if you buy right and you have a realtor your professional realtor that can help you with you know what will values be like in six months when I'm done my renovations or in a year or two years I might have a win here you could buy the house across the street at the doll house and somebody already did you're paying a premium price for that aren't you yeah or you can go the opposite way once you know and are kind of schooled on two or three K lending by four sixty put twenty in it have it worth ninety five ninety eight hundred that's like a good buy for me something could great just opportunity all around for neighborhoods for bout for buyers for everybody right yeah so from first time homebuyer second time homebuyer step-down borrowers you know you may have some older couple moving from you know empty nester situation they're in a 2000 square-foot two-story they want to go down to a ranch they love this developed area it's been around for a long time but it was built in the 50s or the 60s what does it need needs a facelift even the seniors can use the 203k loan to to to make it their home take a house they like it make it the home they love for the two or three can

6 Comments

  • Robby T. says:

    Hi thanks for the info. Can you use this loan with a conventional loan? Thanks

  • Jaydogg Doggydogg says:

    I would love to get a 203k loan… but any home i have seen end up being sold to people with cash. Owner occupancy must not be required by HUD if you pay with pure cash?

  • James Angelica says:

    I have to say your definition of flippers is absolutely ridiculous. Most flippers are not doubling their money but rather making 20-25% margin just as any other small business does. And as far as selling for more than the property is worth. Well, banks don't lend without an appraisal.

  • Thomas Young says:

    From my experience with 203k loans, the best advice is to use a lender that offers assistance via third party with 203k processing.
    This shortens the closing time by weeks. Try cfs-mortgage(.)com/203k for more information.

  • FHA 203(k) Forum says:

    They are planning to do the very thing you guys are talking about! They want to move in about 2 or 3 years to recoup the money they've earned though this fantastic loan program. Hands Down! This is the best kept secret in the market…

  • FHA 203(k) Forum says:

    Our most recent client moved in to their home with an upside value of over $30,000!! – Gary Smith – Energy Rated Homes of Mississippi – 203K Contractor

Leave a Reply

Your email address will not be published. Required fields are marked *