The Streamline FHA 203(k) loan lets you purchase or refinance and rehabilitate a property with one loan closing. The projected rehabilitation costs are held in an escrow account and disbursed as work is completed and inspected. The loan amount is based on the lower of the projected market value following repairs or purchase price plus renovation costs.
FHA's Streamlined 203(k) program permits homebuyers and homeowners to finance up to $35,000 into their mortgage to repair, improve, or upgrade their home. Homebuyers and homeowners can quickly and easily tap into cash to pay for property repairs or improvements, such as those identified by a home inspector or an FHA appraiser. Homeowners can make property repairs, improvements, or prepare their home for sale. Homebuyers can make their new home move-in ready by remodeling the kitchen, painting the interior or purchasing new carpet.
Benefits of a Streamline 203(k) Loan
- Properties that are sold “as-is” often would not qualify for a standard FHA loan. However, 203(k) loans are designed to improve, update and modernize the home.,
- The loan enables you to purchase foreclosure properties that require repairs. Most HUD Foreclosure properties could benefit from a 203(k) loan.
- You can purchase a home that does not require repairs and finance the cost of “modernization” or cosmetic repairs.
- The loan allows for 1-4 unit dwellings, including condominiums.
- Up to 110% (100% on condominiums) of the after improved value of the home may be used as basis for mortgage calculations. (The appropriate LTV factor is then applied.)
- Buyers who purchased a property with cash can use the 203(k) program to complete repairs/ modernization and replenish funds used at the time of purchase. Mortgage must close within 6 months of cash purchase.