Scenario: Buyers find a home they really like in a neighborhood they love and the price is perfect. It just needs a few things like maybe a new roof or new HVAC system and they're in! Since it is either a bank REO or a distress sale there is no way the seller is going to make the repairs. Even though the total work needed is less than $35,000 the buyers (a) cannot get a loan approval because of the needed repairs and (b) don't have the money to do the work anyway.
Meet your friend, the buyer's friend, the seller's friend and my friend: 203k FHA Streamline Renovation Loan.
The 203k streamline has the same qualification factors and loan limits as a standard FHA loan. The "streamline", in this case, refers to the limited amount of rehab (maximum $35,000) and not the documentation to qualify as on an FHA streamline refinance 203b. Generally speaking, at least with my Novation Mortgage, the borrowers will need a minimum credit score of 620 (middle), sufficient income, 3.5% of the loan amount in down payment from their own funds or a qualified gift, and to be buying a primary residence.
The 203k streamline does work in conjunction with the Energy Efficient Mortgage (EEM) and is available to first time home buyers.
The one thing the 203k streamline does not like is structural repair.
"FHA's Streamlined 203(k) program permits homebuyers to finance up to an additional $35,000 into their mortgage to improve or upgrade their home before move-in. With this new product, homebuyers can quickly and easily tap into cash to pay for property repairs or improvements, such as those identified by a home inspector or FHA appraiser."
This program is also permitted to be used in conjunction with HUD owned homes even the HUD $100 down purchases in Georgia and possibly other states.
When working with a 203k streamline mortgage it is important to work with a mortgage broker who has experience with the program and who can explain each "moving part" as you need to know. They take a little longer to close, require a little more patience and can be very rewarding to all parties involved.