203K Rehab Loans

Understanding Streamline 203(k) Loans


Program Highlights

  • FHA Renovation Program
  • Simplified process!
  • Up to $35,000 in repairs with no minimum!
  • No consultant required
  • Up to 50% of cost up front for materials
  • Two draws per contractor

Elibible Properties

  • 1-4 unit properties
  • Town houses
  • Condos (interior only)
  • Row homes
  • HUD Repos

Common Improvements

  • New free standing appliances
  • Interior and exterior painting
  • Flooring, carpeting and tile
  • Energy efficient improvements
  • Other improvements that are a permanent part of the real estate

Other Eligible Improvements

  • Changes to eliminate obsolescence and reduce maintenance
  • Modernize plumbing, heating, AC and electrical systems
  • Install or repair well or septic system
  • Roofing, gutters, downspouts
  • Lead based paint abatement

Calculating Loan Amount

  • Use Maximum Mortgage Worksheet
    • Purchase price or existing debt
    • Cost of repairs
    • Contingency Fund (optional)
    • Inspection fees and title updates
    • Permit Fees
    • Supplemental Origination Fee (2.5%)
  • Compare to 110% of after-improved value

Who Can Do the Work?

  • Borrower can select their own contractor
    • Should be licensed and insured if required by municipality
    • Should be able to document qualifications
  • Borrower can do their own work only if they can document their qualifications

Getting them Closed

  • Borrower collects contractor bids
  • Bids are used to order appraisal
  • Appraiser will do subject-to appraisal
    • VC sheet will list improvements and cost
    • Any items on VC sheet should be addressed
  • Borrower and contractor sign contract

What Happens After Closing?

  • Work begins
  • Up to 50% can be paid for materials
    • Invoice needed
    • Contract from contractor
  • Title update will be needed
  • Final inspection will be done to ensure workmanlike completion of work

What makes the Streamline K Better in Todays Market

  • Much faster process to get to closing
  • Include appliances and cosmetics
  • Up to 110% of after-improved value
  • Overcome borrower concerns about property
  • Get a better price on a tired home - Then make it your own!