FHA 203k Streamline

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blog-author-clayjeffreys3

Over the past couple of months, I’ve closed a couple 203k streamline loans. I figured now is a good time to talk more about the program itself.

The 203k Streamline loan rehabilitation loan from FHA that allows a borrower (purchase or refinance) to put a little bit of “tender loving care” into a home that needs some updating. There are two versions of this loan. Let me talk about both so there is no confusion.

The first version is simply called the FHA 203k loan. There is no cap on the amount of work that can be done to the home (so long as the home appraises high enough). The borrower can also make structural changes to the home. This loan program takes a longer time to get through underwriting and may require multiple appraisals. This adds up to making it a 45-60 day closing time frame.

A quicker way is using the FHA 203k streamline program. The Streamline version has a cap on the amount of work that can be done. The program also requires a 10% contingency reserve in case the work goes over budget. The cap is $35,000, and 10% of that amount is $3,500. Since almost every one chooses to finance the 10% contingency reserve, that leaves roughly $31,500 for the renovations. Once the work is complete, any excess funds left over in the contingency reserve will be deducted from the loan amount.

The advantage of using the Streamline version is it allows for a quick closing time (around 30-40 days), and an easier time through underwriting. The main drawback is the cap on the amount of money that can be used for renovations.

Here are some bullet points about the FHA 203k Streamline:

  • allows up to $35,000 worth of work that can be done on the home (roughly $31,500 if financing the 10% contingency reserve)
  • the Streamline program allows for a variety of items to be repaired/replaced/updated (roof, windows, siding, flooring, fixtures, appliances, HVAC, etc.).
  • the Streamline program will not allow any structural changes to the home. This means walls cannot be taken out to open up the floor plan.
  • other allowable improvements can include mold remediation, lead-based paint stabilization, septic system repair/replacement
  • borrowers can choose to add exterior decks or patios
  • money can also be used to modify a home for persons with disabilities

As you can read, there are a lot of advantages and goals that can be accomplished using the 203k streamline loan. If you are buying a property in the state of Georgia, and would like to know more, contact me. We can talk about the details of the program and see if the FHA 203k Streamline loan will fit your needs.

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