So you or your client have found a home in a great area in the client's price range. Only one problem: it's in bad shape. The HVAC system is 50 years old, the roof is 40 years old and the windows may as well not even be closed. Plus the kitchen has vinyl floors in 3 different patterns and the counters are all laminate with burns and holes and scars.

Not to fear! Meet the FHA 203K Streamlined renovation loan.

Eligible Improvements Virtually any kind of improvement is eligible provided it becomes a permanent part of the real property and adds value. 

 

  • Additions to the structure
  • Kitchen or bath remodels
  • Finished basement or attic
  • Patios, decks or terraces
  • Roofing and landscaping
  • Safety, energy efficiency and electrical upgrades
  • Handicapped accessibility improvements

 

Luxuryitems are not eligible

 

  • Swimming pools, hot tubs, tennis courts, gazebos, barbecue pits, saunas or alterations to support commercial use
The maximum loan amount must be within the FHA loan amount maximum for the MSA where the home is located and must include the purchase price and the renovation amount. The maximum renovation amount is $35,000 and the minimum is $5,000. Under $5,000 we can do with an escrow of repair funds. A minimum of 10% contingency reserve is required and must also fit into the FHA loan maximums for the area where the property is located. (Any balance remaining on the contingency will be applied to the principal balance and may not be used for additional repairs.)

FHA 203K Streamlined Rehab/Renovation Loan

Yes, it takes a little longer to close an FHA203k Streamline loan than it does to close a standard FHA loan. If you are an agent and you are concerned about that extra couple of weeks just think of it this way: You may make a sale you would not have otherwise made. You may help a buyer get into a home in the area where they wanted to live instead of where they "had" to live. You can be a real hero for someone.

If you are in Georgia I can help you with the necessary paperwork and give you a short class in how to use the FHA 203K Streamline Rehab loan to purchase, sell or represent homes in today's economy. Never hesitate to call me at any time and I'll be happy to answer your questions.

 

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I started writing on Active Rain in 2006 when I was representing the mortgage industry. I am no longer in that industry and many of the older posts contain outdated information. Please do not contact me for LENDING or MORTGAGE questions but rather contact a licensed mortgage professional from your area. I have always been in marketing and branding and that is still what I do. Thanks for reading!

 
This post has been included in Georgia Real Estate News
Post is included in group: North Georgia Real Estate

31 Comments on FHA 203K Streamline Renovation/Purchase

20 Most Recent Comments Displayed Show All

NOV
19
2009

I've heard about this loan.....but it's not used much in my area. From what I've heard it's hard in our area to find lenders that want to use it. I'm definately going to check with a couple of the area lenders and see if they would be willing give me some information on it.

Thanks for your blog.....maybe it's opened up a avenue for some of our troublesome listings.
6:19pm • #13
297,508 Points 19 Featured Posts Localism Sponsor Outside Blog

Ken,

Thanks for this useful information - you do a great job of breaking it down and simplifying the overview of the program.  I have resisted these in the past because of the time and the uncertainty.

I'm going to go ahead and reblog this for my readers...

John
6:37pm • #14
874,784 Points 167 Featured Posts Localism Sponsor Outside Blog Attended Rain Camp Called Shot Master
Ken - Thanks for providing more details about this program. I have heard about it since I got my license, but I haven't. Ever closed one of them.
6:57pm • #15

I've had experience with this type of loan "post hurricane ike" here in Galveston. They are very beneficial in certain circumstances. Great blog! and informative to those that haven't been exposed to it~
7:33pm • #16
887,092 Points 47 Featured Posts Localism Sponsor Attended Rain Camp Called Shot Master

Ken, consider this re-blogged again. Great explanation of this loan. Indeed it will sell homes that otherwise wouldn't sell. What about an older home that has been taken down to the framing? Would that qualify? We have such a listing. A lot of work has been done on it, but the HVAC and drywall and kitchen and bath fixtures, cabinets, haven't been put in. Sounds perfect for this loan.
7:56pm • #17
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PS Ken, do they charge a higher interest rate for this loan vs. a regular FHA loan?
7:58pm • #18
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Ken - great informaiton. I had heard of these but was not sure of the details...now I am. I have the same question as Sharon above.

Jeff
8:37pm • #19
745,308 Points 22 Featured Posts Outside Blog

Thanks for reminding us what has to be done and that there are different options out there.
8:51pm • #20
153,128 Points 3 Featured Posts Outside Blog

My experience with 203K deal was eventually very good. That was the only way to help this family with the affordable house in a desirable neighborhood. Waiting period was terribly long. Yes, it was Bank of America who secured the repair part of the loan. However, if your clients are prepared, patient and if they hire a decent contractor it's a perfect solution for many families!

It may be a problem if your clients buy a house in the city with point of sale inspections and escrow requirement. Not every city honors 203K purchases. They just want money in escrow right at closing.
9:20pm • #21
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I can't believe that Lenn beat me to the garage...  My head is spinning with the possibilities...
9:30pm • #22
131,509 Points 15 Featured Posts

This is a great loan with all of the beat up trashed bank owned homes out there.... Not only does it up the value of the home.. it also provides work for the local construction trades and that's real recovery.

The $8,000 tax credit should be mandated towards home improvements instead of who knows what... A little sweat equity makes a house a home.
9:35pm • #23
240,236 Points 7 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Ken,

Great information. I recently signed up with Dennis Walsh and Associates to become a 203k specialist and residential construction certified. I've also recently written a post on FHA 203k loans, hopefully by learning more about it I can encourage more buyers to avail of it. it's a win win situation!

:) 
9:42pm • #24
201,337 Points 1 Featured Post Called Shot Master

Ken,   Great post about the 203K program.  I would like to see more realtors using this program to sell Bank Owned or HUD properties to Owner Occupants instead of Investors who generally do a little work and then resell the property.  As Svetlana said "if your clients are prepared, patient and if they hire a decent contractor it's a perfect solution for many families!" Also dealing with a Lender that is familar with the program is a key part of the success.   In Northern Ohio we had about 90 lender that did 203K loans in the last year.  Most did very few of them, The company I work for does about  20% of all the 203K loans in Northern Ohio.  My advise is for clients to choose a lender that does and knows the 203K product not a lender that wants to start doing them. 
9:47pm • #25
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A client who just got a contract are foreclosed property that is not complete. The lenders say that any government-backed loans will not work because the house is not habitable, the plumbing isn't finished no appliances, no floor coverings just wondering if this type of loan will work in this situation
11:09pm • #26
NOV
20
2009

I have not had a deal accepted with a 203k. I have made several offers for clients with this type of loan but it seems that most sellers are looking for cash deals and we have missed a couple of nice properties this way. I would really like to close one with a 203k so that I have gone through the process with it.
12:29am • #27
110,832 Points 2 Featured Posts Outside Blog

I'm certainly going to check into this loan product.  I'm going to see if anyone is doing these in the Seattle area.
2:27am • #28
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Ken,

This took some time for you to cover this so well. I am appreciative of this post, it spells it out in easy to understand format that can be understood by anyone whether they are working with mortgages daily or a consumer that needs an FHA 203K.

Thank you.  Is it Ok if I re-blog for my clients also?

 
7:17am • #29
331,172 Points 16 Featured Posts Called Shot Master

I am sooo grateful for this info. Not easy to locate!!
7:54am • #30
116,365 Points Localism Sponsor

I assume this can be used to buy REO's and short sales too?  Thanks for the great info, again, KEN!
2:43pm • #31
709,084 Points 39 Featured Posts Outside Blog Called Shot Master

'Streamline version is a little limited' - just closed one and you better have mucho patience with the extra paperwork.  Good post Ken.
3:12pm • #32

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Ken "Yes You Can" Cook (Ken Cook, Brand Strategist) Rainmaker_large

Ken "Yes You Can" Cook

Marietta, GA

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Address: Marietta, GA, 30062

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