The FHA Streamline 203K loan program is a fast and easy way to obtain rehab funds. It is increasing in popularity as more people purchase foreclosed homes. Rarely is a foreclosed home in move-in condition, leaving many buyers hesitant to purchase foreclosed homes or homes considered fixer-uppers because they lack the funds necessary to make small improvements.
The FHA 203K Streamline program addresses this problem by enabling buyers to roll up to $35,000 into the original mortgage balance. Buyers can use these additional funds to make simple repairs, meaning repairs that don't require an architect or licensed engineer's involvement or plans.
This unique borrowing opportunity eliminates the need for buyers to immediately apply for a home equity loan to fund home repairs. Another advantage of the FHA 203K Streamline program is that it can be used to purchase or refinance a single family home provided it's used as a primary residence. Borrowers have the option of getting a fixed or adjustable rate.
Here's an example of the repairs that can be made using FHA 203k Streamline funds:
o Painting, both exterior and interior o Replacement windows/doors o Upgrades to plumbing and electrical systems o Add or repair gutters and downspouts o Replace or repair flooring o Purchase new kitchen appliances o Roof repair or replacement o HVAC system upgrade/replacement o Energy conservation improvements such as insulation and weather stripping o Improvements to accommodate residents with handicaps or disabilities o Non-structural remodeling
A variation of the program, FHA 203K Standard, allows funding in excess of $35,000 and the lowest mortgage rates. The difference between this and the Streamline program is that the work done as part of this program is more major in nature. Qualifying uses include things like adding on a room, landscaping the property, building a deck, patio or terrace, installing steel-insulated exterior doors and rehabilitating or improving a detached garage.
FHA 203K Standard program highlights:
o Six months' worth of payments can be financed into the loan o On purchase loans, seller contributions can be as high as six percent.
If you're buying a home in need of improvement, or already own a home that needs improvement, an FHA 203K Streamline or Standard loan could provide the funds you need to complete the work.
