FHA 203k Mortgage Requirements and Guidelines
The FHA 203k mortgage program has been the primary tool of the Federal Housing Administration (FHA) for providing insured mortgages for the purchase or refinance of single family properties (one to four units) in need of major rehabilitation. But what if a smaller scale of repairs is required? The Streamline 203k program is a simplified 203k that was developed specifically to address these needs. With the Streamline 203k program, you obtain one loan for the purchase (or refinance of an existing debt) and the amount necessary to complete the required repairs.
We offer both the streamline and full 203k loans. Structural repairs and repairs over $35,000 would fall into the full FHA 203k loan category.
Advantages to the FHA Streamline 203k:
- Get a preliminary loan approval in minutes
- Long-term amortization
- Competitive and attractive rates
- Repairs are completed after closing with loan proceeds
- Great tool for REO Properties
- One loan amount for the purchase or refinance and repairs
- Mortgage amount may also be increased when combining EEM (Energy Efficient Mortgage) with Streamline 203k
- 3.5% down for 96.5% financing*
Frequently asked questions for FHA 203k Loans
- What repairs are eligible under the FHA Streamline 203k?
- Repair/Replacement of roofs, gutters, and downspouts
- Repair/Replacement/Upgrade of existing heating, ventilation, and air conditioning systems
- Repair/Replacement of plumbing and electrical systems
- Repair/Replacement of flooring
- Minor remodeling that does not involve structural repairs, such as kitchens
- Exterior and interior painting
- Weatherization, including storm windows and doors, insulation, and weather stripping
- Purchase and installation of appliances, including free-standing ranges, refrigerators, washers and dryers, dishwashers, and microwaves
- Improvements for accessibility for persons with disabilities
- Lead-based paint stabilization or abatement of lead-based paint hazards
- Repair/Replacement/Addition of exterior decks, patios, porches
- Basement finishing and remodeling that does not involve structural repairs
- Basement waterproofing
- Replacement of windows and doors and exterior wall re-siding
- Is the 203k Streamline for purchases only?
- 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.
- Who is responsible for repairs?
- The homebuyer/owner pays for the repairs from the loan proceeds.
- Do repairs have to be completed before the loan closing?
- No, the repairs may begin after the loan is closed.
- Do I have to hire an FHA Inspector?
- 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.
- What repairs are not allowable?
- Repairs that are considered major rehabilitation or requiring structural modification.
- What if your property requires major repairs?
- You may use the regular FHA 203k program for this instance.
- Who receives payment for the repairs?
- Up to two payments may be made to the contractor or the homeowner.
- How much down payment do I need?
- As with most FHA mortgage loan programs, the minimum investment is 3.5%*.
- What about construction fees?
- Most construction fees (i.e.: loan discount points, title update costs, permit costs) may be financed in the loan.
- Where can I find out more information about the 203k Streamline?
- Contact us today!
- Important Disclosure
*3.5% down payment on $193,000, 4.125%/ 5.713% APR, 640 FICO, 30-year fixed rate mortgage. Mortgage insurance is required. Rates subject to change. Subject to credit approval.