I have a client that is interested in a house that is in need of repair. He is going to have to get a 203K loan and I was just wanting to know if any of you had any experience with this type of loan, and if so is it harder to qualify for.
Thanks

there are certain requirements,you could just do a regular loan with checks made out to contractors for repairs.example house is worth 120 perfect needs 15 k worth of repairs offer seller 110 but stipulate 15k is going to be used for repairs then get bids on each job and at closing attorney will cut checks made to the different contractors to perform the work.They will never give the repair money directly to the buyer,it's to tempting to go cheap on the repairs and pocket the cash and the lender knows this.

This is a type of FHA loan where an escrow is set aside for repairs to be done after closing. I do not have direct experience with these loans, as no one here in my area will do them. An FHA loan is not harder to qualify for, in fact they are a bit more liberal on ratios. I have had lots of people who couldn't get a loan any other way. Interest rates are traditionally lower, but the closing costs can be high. You can negotiate seller paid closing costs, but will probably have to make a higher offer in that case, which in reality means you are borrowing your closing costs and repair money. Yes, FHA is a real pain to deal with, but in many cases it is the only option.

Generally a 203K loan is no harder to qualify for than any other.

203K works like this. There are 2 appraisals done; 1 to determine the property's current value and another to determine the "as repaired" value.

FHA will insure the higher loan. Once you close the difference between the "as is" price and the "as repaired" price is treated like draws on a construction loan until the repairs are completed and the 'draw' is exhausted.

These guys give a good explanation as to how a 203K loans works.

http://www.1stpreference.com/differentnew.html