If you are considering the FHA 203(k) program but are finding that there is a lot of hassle with getting a general contractor, consultant and plans – you may be better off by going with the FHA 203(k) streamline program.

The FHA 203(k) streamline program can be used for purchasing a house or refinancing an existing one.  It has the same credit/eligibility/underwriting requirements as all other FHA loans and you can choose between a fixed or adjustable rate.  It is a *limited* repair program that allows you to finance home improvements/upgrades up to $35,000 right into the mortgage.

Property Requirements

In order to be eligible for the 203(k) streamline program, a property must be either a 1-4 single family residence, a manufactured home (must meet FHA guidelines) or a condo in an FHA approved condo project (although spot condo approvals are possible). Regardless of property type, the property must be 100% complete and at least one year old — no partially built homes allowed.

Eligible and Ineligible Improvements

In general, to be eligible for the FHA 203(k) streamline program, improvements must not be structural in nature and must be less than $35,000 total. The most popular eligible repairs for the FHA 203(k) streamline program include:

• Repair gutters and downspouts
• Repair/upgrade of existing HVAC systems
• Minor repairs of plumbing and electrical systems
• Minor repairs of existing flooring
• Minor remodeling that does not involve structural repairs
• Exterior and interior painting
• New appliances – which may include free-standing ranges, refrigerators, washers/dryers, dishwashers and microwaves but may not exceed $2,000
• Improvements for accessibility for people with disabilities
• Basement waterproofing

Some examples of ineligible improvements under the FHA 203(k) streamline program include:

• Major rehabilitation
• New constructions including room additions
• Repair of structural damage
• Repairs requiring detailed drawings or exhibits
• Landscaping or site amenity improvements
• Any improvement that will take longer than 3 months
• Any project that will create new foundations for Manufactured Homes
• Repair foundations for Manufactured Homes

FHA 203(k) Streamline or Standard?

With more bank-owned property on the market and people often buying homes that “need a little love”, the FHA 203(k) and FHA 203(k) streamline programs are becoming popular options.  The best way to tell whether the FHA 203(k) standard or FHA 203(k) streamline program is the right one?

If the property needs “a lotta love” (think structural repairs), it is likely that the FHA 203(k) standard program will apply.

If the property needs “just a little love”, then it is possible that the FHA 203(k) streamline program will work.

Related Posts on 203 (k):FHA 203(k) Loan Program – Part 1

Mortgage Rates for November 11, 2008

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2008 Copyright All rights reserved by Candace Robinson, Arizona Real Estate Agent specializing in Maricopa County Homes and Condos for Sale