Anyone familiar with the FHA 203K Rehab Home Loan? Contractor needed!

First, this may be posted in the wrong spot so let me know if it is.

We are purchasing our home of 20 years from a family member and are strongly considering a 203K loan.  If your not familiar, this loan allows the purchase price of the home plus repairs, renovations, upgrades, or additions to be lumped into one loan. 

There are some hoops to jump through during the construction process which will be challenging but we are well aware of them.  First the work must start within 30 days of closing.  Second, work must be completed within 6 months.  During this time a FHA consultant will inspect work done about every two months and a check for the work will be paid to the contractor for work completed.

The contractor chosen to do the construction must be an approved FHA 203K contractor.  Basically this means that they must be vetted by the FHA loan agent, licensed, bonded, and hold a certain amount of insurance.  They must also be financially able to start the project and work through it knowing that the funds are paid from a construction "trust" set up at the time of the loan.

Basically, my questions are:
1.   Have any of you been through this process?

2.   Does anyone know of a good 203K contractor?  We are in Petaluma and would like someone somewhat local.

Any help would be appreciated.

Good loan.  Do you have a loan agent/officer picked yet? I have found that established loan people who have done more than a couple of these are  better to use as they know all the Contractors and ins and outs of this loan type. A brand new loan officer trying one will drive you insane. I know  I am a Real Estate Broker and they drive me crazy.

You could also do a regular loan and include the fixes in purchase price and pay out of escrow and complete work before you buy.

I strongly considered an FHA 203k loan, but ended up finding a house that didn't need one. I couldn't find anything negative about the 203k loan, per se, but my lender was not in favor of the the idea.

I'd recommend finding a lender who specializes in that type of loan, or at least does them frequently.

Since you're buying from a family member, it should be a LOT easier. Buying on the open market was incredibly fast-paced and stressful...



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Yes this loan will definitely work for what we are looking to do.  We like the time constraint of 6 or so months.  I am the type of guy that if I don't have the structure in place this project will end up like the Winchester Mystery House and will take 15 years to get half way done! .

We do have a loan agent and she's familiar with the process.  Her office actually has a team that works specifically on these types of loans.

The issue we are running into is finding more than one contractor to get a bid from.  The loan agent has one guy she recommends.  Spoke to him today and he seemed pretty cool.  He's coming by next week to check out the work that we would like done. 

But we would like to get more than one bid.  Don't feel like we would be doing our due diligence if we didn't get at least two or better yet three bids.  Not looking for a deal, just want one or two good, reliable contractors who work with this type of loan.

And thanks for the replys guys!

Tried the local BBB or unions. Also I'm sure the local or state business licensing office would have an idea where to find a few. Kinda like asking the bar association about a lawyer

Good idea.  Thanks Mojo