FHA Loans Expand Home Buyer's Options

Mortgage and Lending with Network Funding LP NMLS 2297

I recently wrote and article for six of our local newspapers on the FHA 203(K) streamline home loan.

Take a look......




Streamline loan widens access to FHA financing

Brent C. Bruce

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If you are a homebuyer looking to take advantage of today's amazing home values using an FHA (Federal Housing Administration) loan, buying a home can seem impossible.

Buyers using FHA financing not only have to find a home that they like, but most people think it will have to be up to FHA standards as well.

Many homes on the market have damage: missing cupboards, holes in the drywall, sometimes even broken windows or missing appliances.

An FHA homebuyer may walk in, look around and sadly walk out, thinking that there is no way to buy this house.

The good news is that this is not true.

It is a common misconception that a house must be in good or even great condition for the FHA to finance the house.

In fact, the FHA has programs designed specifically for houses that are in need of repairs or upgrades.

One of these programs is the FHA 203(k) "Streamline" loan. This versatile loan product allows homebuyers to purchase a house and finance any necessary repairs into the mortgage loan.

This allows homebuyers to view a house not as it is, but as what it could be.

Do you love the house but hate the kitchen and want it completely remodeled? Maybe the house is in need of carpet and paint, but you just won't have the money for that when you move in. Or perhaps the house is in good shape but you would like to replace the windows with more energy-efficient double-pane, vinyl windows and replace the old

dishwasher and range.

All of these options are available with an FHA 203(k) Streamline home loan.

This program can also be used to clean up a house that has been damaged or vandalized while vacant.

Examples of eligible improvements are listed below. Keep in mind that this is not an all-inclusive list:

• Repair/replacement of roofs, gutters and downspouts

• Repair/replacement/upgrade of existing heating, ventilation & air conditioning systems

• Repair/replacement of plumbing and electrical systems

• Repair/replacement of flooring

• Minor remodeling that does not involve structural repairs

• Exterior and interior painting

• Purchase and installation of appliances, including free-standing ranges, refrigerators, washers and dryers, dishwashers and microwaves, lighting fixtures, ceiling fans

• Improvements for accessibility for persons with disabilities

• Lead-based paint stabilization or abatement of lead-based paint hazards

• Repair/replacement/addition of exterior decks, patios, porches

• Replacement of window and doors and exterior wall re-siding

Most improvements are eligible, provided they add value and are permanently attached to the foundation.

However, not all repairs and upgrades are eligible. The basic rule of thumb is that any repairs requiring city or county permits, or any other structural repairs are not eligible under the FHA 203(k) Streamline.

Here is a list of some of the repairs and upgrades that are not eligible for this program:

• 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, (pools, gazebos, fencing)

• Any repair or improvement requiring a work schedule longer than six months

By now you may be thinking of all possibilities this program can offer. Keep in mind that this loan program is available only for homes that are to be occupied by the owner; investment properties are not allowed.

Also, the maximum amount of rehabilitation or upgrades can not exceed $35,000 total.

Any work to be completed must be approved by the lending bank and any contractors that will be completing the work must be state licensed and reviewed by the lending bank as well.

The overall qualification guidelines are the same as standard FHA guidelines, so if you can qualify for an FHA loan, then you most likely can qualify for the FHA 203(k) Streamline.

Keep in mind that guidelines and qualifications can vary by bank or lender.

Brent C. Bruce
Branch Manager
Allied Home Mortgage Capital Corp.
Rancho Cucamonga

Phone - 909-463-4750


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James K Barath, CMPS
Canopy Mortgage, LLC - Merrillville, IN
FICO Pro, Certified Military Housing Specialist

Long time no chat. Great presentation of the FHA 203(k) Rehabilitation Mortgage Insurance Program.

Nov 25, 2009 08:26 AM #1
Brent C Bruce NMLS#256137
Network Funding LP NMLS 2297 - Rancho Cucamonga, CA
Brent Bruce NMLS#251637 Branch Manager

Thank James - How are things at BM?  Doing well I hope. 

Nov 25, 2009 08:30 AM #2
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Brent Bruce NMLS#251637 Branch Manager
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