We’ve been bombarded with news about the number of vacant and foreclosed homes on the market. Many of these homes are the in the perfect location and are in the right price range ….but need a little tender loving care. There is a mortgage loan program that addresses this issue – the FHA 203k Streamline Mortgage Loan.
FHA 203K Streamline Mortgage Loans
The FHA 203K Streamline Mortgage program gives you the ability to refinance or purchase a home in need of repairs by allowing you to include the cost of repairs in the loan. This program is guaranteed by the U.S Department of Housing and Urban Development and permits homebuyers to finance an additional $35,000 into their mortgage to improve or upgrade their home before move-in.
The FHA 203K Streamline mortgage loan program has been instrumental to neighborhood revitalization efforts.
The following repairs are eligible under the FHA 203K Streamline Mortgage loan program:
- Repair/Replacement of roofs, gutters and downspouts
- Repair/Replace/Upgrade of existing HVAC systems
- Repair/Replace/Upgrade of plumbing and electrical systems
- Repair/Replacement of existing flooring
- Minor remodeling, such as kitchens and baths
- Exterior and interior painting
- Weatherization that includes storm windows and doors, insulation, weather stripping, etc.
- Non-structural improvements for accessibility for persons with disabilities
- Discretionary repair items that may not have been included in the appraisal, such as, repair of exterior decks, basement waterproofing, etc.
FHA 203K Frequently Asked Questions
Q: Is the 203k Streamline for purchases only?
A: No, the Streamline 203k may be used for a purchase or a refinance. It may also be used to purchase a REO (Real Estate Owned) property.
Q: Who is responsible for repairs?
A: The homebuyer/owner pays for the repairs from the loan proceeds.
Q: Do repairs have to be completed before the loan closing?
A: No, the repairs may begin after the loan is closed.
Q: Do I have to hire a general contractor?
A: If the repairs require more than one contractor, the mortgagor must utilize the services of a licensed general contractor.
Q: Do I have to hire an FHA Consultant?
A: No, to eliminate the need and cost for an inspection of the completed repairs, the lender may accept receipts from the contractor or proof of completion of the work to the homeowner’s satisfaction.
Q: What repairs are not allowable?
A: Repairs that are considered major rehabilitation or requiring structural modification. For more information on purchasing a home requiring major rehabiliation or structural modification contact a licensed mortgage loan officer near you.
Q: What is the maximum that can be spent on repairs?
A: Rehab costs, plus applicable contingency reserves and fees cannot exceed $35,000.
Q: Who receives payment for the repairs?
A: Up to two payments may be made to the contractor or the homeowner.
Q: How much down payment do I need?
A: As with most FHA mortgage loan programs, the minimum investment is 3.5%.
Q: What about construction fees?
A: Most construction fees (i.e.: loan discount points, title update costs, permit costs) may be financed in the loan.
The FHA 203K Streamline Mortgage Loan program can help you give a fixer upper a little tender loving care. The FHA 203K Streamline Mortgage loan process can be explained in more detail by a licensed mortgage loan officer. Click here to find a mortgage loan officer near you. If you would like to jump right into the application process, click here to begin your Inlanta Mortgage loan application.
Need a little refresher on mortgage loans in general? Check out our blog post Mortgage Loan Basics.
Inlanta Mortgage is a multi-state mortgage banker based out of Brookfield, Wisconsin. NMLS# 1016.
Inlanta Mortgage is not acting on behalf of or at the direction of HUD/FHA or the Federal government.