FHA 203k Streamline Rehab Loans For Buyers Of Fixer Uppers
This BLOG On FHA 203k Streamline Rehab Loans For Buyers Of Fixer Uppers Was UPDATED And PUBLISHED On July 29th, 2020
The FHA 203k Streamline Rehab Loans For Buyers Of Fixer Uppers is different from the standard FHA 203(k) loan. FHA 203k Loans For Buyers Of Fixer Uppers is designed for minor rehabs for a new home purchase. The maximum rehab loan is $35,000.
- Major remodeling is with no limit on construction funding is the standard FHA 203k Loan
- FHA 203k Streamline Loans For Buyers Of Fixer Uppers limits the rehab budget to $35,000
- Homeowners can still carry out minor cosmetic alterations to home using this loan
- Do not confuse the FHA 203k Streamline Loans with the standard full 203k
In this article, we will discuss and cover the guidelines on 203k renovation loans.
Loan Limit On FHA 203k Streamline Rehab Loans
Borrowers of FHA 203k Streamline Rehab Loans can borrow between $5,000 and $35,000 dollars.
- Borrowers are not permitted to make any structural alterations to the property since these are not allowed
- So what types of repairs can homeowners do?
Types Of Repairs Allowed With FHA 203k Streamline Rehab Loans
Borrowers can use an FHA Streamlined 203(k) loan for a wide range of alterations and repairs to your new home.
- Borrowers can use it to replace old guttering and downspouts
- Replace existing HVAC units, to repaint the entire property
- Re-plumb the property
- New windows and doors
- Waterproof the entire home, including the basement
- Repair or replace a septic tank and improve accessibility
- Can also have roof repairs carried out
- However, homeowners cannot use finance to install luxury items such as pools, hot tubs, tennis courts, outdoor kitchens or Jacuzzis
- Structural changes or additions such as new rooms are not allowed
- Replacing porches, patios, and decks are allowed
- All repairs and additions must comply with local building regulations and any local authority zoning codes.
They must also meet HUD’s minimum quality requirements.
Applying And Qualifying For FHA 203k Streamline Rehab Loans
Once home buyer have chosen the home they want to buy, make a list of the improvements or rehabilitation work they want to carry out.
- The purchase contract should state that the loan will be an FHA 203k Streamline Rehab Mortgage
- Fail to do that and you may be forced to purchase the property regardless
- Homebuyer needs a spreadsheet on the scope of work
- A HUD Approved general contractor needs to be named
The contractor must be qualified to carry out all the work contracted.
Home Appraisal Requirement
FHA 203k Appraisal needs to be ordered.
- As is and as complete appraisal
- When the appraisal is carried out, the total value of the house will be calculated as if the work had been carried out
- On approval of the loan and the work, the mortgage will be closed as normal for the combined cost
- The price of the real estate plus the cost of the repairs
- That cost cannot now be changed and must be carried out for the stipulated price
- The sum approved for the work will be placed in an escrow account, together with an additional 10% – 20% contingency to be used only if needed and approved
- The contractor can receive 50% at the start of the work and 50% on completion
- The total spent is amortized into your mortgage, so need not be repaid separately
That is fundamentally how the FHA Streamlined 203(k) loan operates. It is much simpler than a regular 203(k) and quicker to have approved.
Gustan Cho Associates are FHA Loan Specialists and can do business in multiple states. Please contact Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at firstname.lastname@example.org.