The loan process from application to funding is just slightly longer than a typical FHA or conventional loan program due to the additional step of inviting the contractor and consultant to the property to determine construction plans.

To be specific, the mortgage process is similar to any other loan with the exception of adding a few extra days to include the contractor and consultant. It’s best to ask your lender what type of extra cushion they want to feel comfortable meeting closing deadlines on time.

The renovation work should be started within 30 days of closing on both the Limited and Full 203k Loan programs.

FHA guidelines allow up to six months for project completion, which may be necessary for a Full 203k loan where new floors or rooms are being added and frequent city approvals are required. Extensions are also granted for special circumstances.

However, the more popular Streamlined / Limited 203k loan program typically takes 30-45 days for simple cosmetic and energy efficient upgrade to a property, such as new paint, flooring, cabinets, and granite countertops.

Keep in mind that the loan proceeds are fully disbursed at the time of closing, so the seller and real estate agents are paid in full before any work begins on the new property. Project funds are placed in an interest bearing escrow account and are drawn down by the contractor at certain times and processes.

Video Transcript
With the FHA 203K, whether it’s the limited program or the full 203K, the work is supposed to start within 30 days of closing. Once the permits have been pulled and submitted, that work should be started. We really wanna get this thing moving as soon as possible, because the timeframe in order to get a 203K done, whether it is the limited or the full version, is 6 months. Now on a limited 203K, it should take nowhere near 6 months. You’re talkin’ about a project that is less than $35,000 in repair. So realistically we would expect that project to be done within really a 45 day period. That’s all it should really take to get these type of project completed. On a full 203K, these projects obviously can push the 6 month period, and also go beyond the 6 month period with exceptions. Because sometimes you are doing extremely large projects, you know, you’re adding second floors, you’re doing things that require approval from the town, you need specific plans, and specs. So it can go a little bit longer. But again, back to the main point of this is. The project should start within the first 30 days, and there really should be no exception to that. So we really wanna get that thing moving as quickly as possible. Listen, thank you so much guys. I really appreciate you being here today on this podcast and this vlog, Renovate This.