When considering the use of the FHA 203k Program or any other Renovation Loan Program its important to first have a better understanding of what is referred to as Minimum Property Standards. These are items related to the overall Safety Health and Soundness of a Property, which factor into the willingness and/or ability of any Lender using a Government or Conventional Loan Program to finance your loan and particular property.
The beauty of the Renovation Loan Programs like the FHA 203k Program is that they allow these types of issues to be factored within the Renovation Budget which in turn assists in getting Lenders to “Pass” the property during the Property Approval Stage of the Loan Process.
This is how you can eliminate the phrase most mistakenly spoken amongst Real Estate Professionals when they say “This home wont go FHA, or This Home wont go VA.” Now these homes can be given consideration as long as you are utilizing the correct FHA, Conventional, or VA Renovation Programs.
Standard Non Renovation Conventional Loans are often considered amongst many Real Estate Professionals as the best alternative route for properties in “disrepair,” but in fact they too also have mostly the exact same Safety, Health, and Soundness requirements as the Government HUD based Programs do.
You may be asking “why does this matter, and why can’t we just do the Renovations ourselves after closing if we can show we have the extra money or skill, etc?” “We only need the money to buy the house.” Interesting enough these items are well known in the industry to be causes of loan delinquency that later lead into Foreclosure proceedings in addition to potential legal action and blame that gets bought back to lenders later by consumers.
Other indicators to look for on Purchases, are properties that are listed for sale in As Is Condition, Cash Only, or Cash & Conventional Only. You can in fact still purchase these properties with a Renovation loan. Typically the seller or listing agent are just not fully educated about Renovation loan options or are simply refusing to accept certain financing by choice for their own reasons beyond familiarity with Renovation Loan program options or not.