Understanding the FHA 203k STREAMLINE

By
Mortgage and Lending with Nima Rezvan Prosper First Funding Corporation NMLS#110681 NMLS#110681

See full size image 

CT FHA 203k Streamline Rehab Loan

Being a mortgage professional since 2002 and I can be honest with you in saying that the hottest inquired about home loan in recent days has been the FHA 203k Streamline.  I'm posting this blog today so that everyone can get themselves familiarized with this loan.  This is an excellent mortgage product specially for buyers of foreclosures, REO properties or bank owned properties because most of these homes need some fixings before a bank or lending institution is willing to lend money on them.  FHA 203k Streamline goes by the FHA guidelines hence the name FHA 203k rehab loan

See full size image For more information directly from the US Department of Housing and Urban Develpment, click on this link: http://nhl.gov/offices/hsg/sfh/203k/203kmenu.cfm

 

Understanding the FHA 203k STREAMLINE

 

I. Program Highlights

  • FHA Renovation Program
  • Owner Occupied Only
  • Simplified process!
  • Up to $35,000 in repairs with no minimum!
  • No consultant required
  • No contingency funds required
  • Up to 50% of materials can be disbursed after closing to each contractor in order to defray cost
  • Two draws per contractor
  • No 10% holdback

II. Eligible Properties

  • 1-4 unit properties
  • Town houses
  • Condos (interior only)
  • Row homes
  • HUD Repos (single unit only)
  • Purchase and Refi Transactions

III. Eligible Improvements

  • Repair/Replacement/upgrade of:

            - roofs, gutters and downspouts

            - existing HVAC systems

            - plumbing and electrical systems

            - flooring

  • Minor remodeling, such as kitchens, which does not involve structural repairs
  • Painting, both exterior and interior
  • Weatherization, including storm windows and doors, insulation, weather stripping, etc.
  • Septic system and/or well repair or replacement
  • Repair/replace/add exterior decks, patios, porches
  • Purchase and installation of appliances, including free-standing ranges, refrigerators, washers/dryers, dishwashers and microwave ovens
  • Accessibility improvements for persons with disabilities
  • Lead-based paint stabilization or abatement of lead-based paint hazards 
  • Basement finishing and remodeling, which does not involve structural repairs
  • Basement waterproofing
  • Window and door replacements and exterior wall re-siding

IV. Ineligible Improvements

  • Major rehabilitation or major remodeling,     such as the relocation of a load-bearing wall
  • New construction (including room additions)
  • Repair of structural damage
  • Repairs requiring detailed drawings or   architectural exhibits
  • Landscaping or similar site amenity        improvements
  • Any repair or improvement requiring a work schedule longer than six (6) months
  • Rehabilitation activities that require more than two (2) payments per specialized contractor

V. Who Can Do the Work?

  1. Borrower can select their own contractor
  2. Should be licensed and insured if required by municipality
  3. Should be able to document qualifications
  4. Borrower can do their own work only if they can document their qualifications

VI. Getting them Closed

  • Borrower collects contractor bids
  • Bids are used to order appraisal
  • Appraiser will do a "subject-to-completion" appraisal
  • Borrower and contractor sign contract

VII. What Happens After Closing?

  • Work begins
  • Up to 50% can be paid to each contractor up front
  • Final inspection will be done to ensure workmanlike completion of work
  • Title update will be needed before final disbursement

VIII. Reasons to pick the 203(k) Streamline

  • Much faster process to get to closing
  • Includes appliances and cosmetics
  • Less expensive (no contingency funds, no consultant fee, fewer inspections, etc.)
  • Up to 110% of after-improved value
  • Overcomes borrower concerns about property

 If you have any questions feel free to visit the Frequently Asked Questions section of US Department of Housing and Urban Development:  http://www.hud.gov/offices/hsg/sfh/203k/faqs203k.cfm

I really do hope that this blog is helpful to you and if you would like to speak to me directly regarding a FHA 203k Loan then you may do so by emailing or calling me.

Your Connecticut Senior Mortgage Broker,

Nima Rezvan

Blackberry: 203.913.6016

Email: Nima@concorde.bz

Website: http://www.NimaLoans.com

 

Comments (4)

Michele Connors
The Overton Group, LLC Pitt & Carteret County - Greenville, NC
Your Eastern North Carolina Realtor

Hi Nima, Great seeing you back on AR...hoping you had a wonderful Easter and looking forward to your helpful reports...Alot of deals out there and getting the FHA Streamline option makes it even better !

Apr 12, 2009 11:01 PM
Maureen Maureen
Orangeburg, NY

Hi Nima - long time.  Good to see you back. 

Apr 13, 2009 06:51 AM
Nima Rezvan CT Lender CT Senior Mortgage Broker
Nima Rezvan Prosper First Funding Corporation NMLS#110681 - Fairfield, CT
First Time Home Buyer Expert - CT FHA Loans - FHA

It's great to be back here on A/R.  Everything has changed though and I feel like it's my first time back on this site.  Thanks for the comments.

Apr 18, 2009 10:43 AM
Dave Halpern
Dave Halpern Real Estate Agent, Inc., Louisville, KY (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert

Many buyers are looking for a truly undervalued property with real equity the day of the purchase. Typically these will be bank owned fixer uppers. The buyer should get an FHA 203k renovation loan so the house can be fixed up fast and professionally. When deciding on the purchase, the increased value of the home resulting from the renovation should be substantially higher than the renovation cost. Always work with a loan officer specializing in 203k loans, and with a Realtor who can project the after-repair value.

Jun 14, 2017 08:30 AM