FHA 203k streamline loan

FHA 203k Streamline Loan Guidelines & Requirements

If you’re looking into buying a fixer upper home.

An FHA 203k Streamline loan may just be a perfect fit for you.

With a 203k loan you can get the fund to purchase a rehab home, plus get up to $35,000 cash to make renovations and cosmetic repairs.

In this article we will explain the in’s and out’s of the FHA streamline 203k mortgage.

Rate Search: Check Current 203k Rates

What is an FHA 203k Streamline Loan?

Rehab loans used to be very complicated. Requiring a high credit score and resulting in having two loans to pay back. With a 203k streamline mortgage you can get the home financed as well as additional cash to make renovations.

Your can choose from a 15-year or 30-year fixed-rate mortgage, or adjustable rate mortgage loan.

The loan amount is typically for more than the purchase price of the home, so there are stricter requirements for a 203k loan vs an FHA loan.

One of these differences is the minimum credit score requirement. While FHA home loans require a 580 or higher FICO score. A 203k streamline requires good credit history, and at least a 640 credit rating.

Standard vs Streamline 203(k)

There are two types of 203k rehabilitation loans, the streamline and standard 203k, or construction 203k loan. The standard 203k loan is a more difficult process. While there is no cash limit, there is more paperwork required and you must hire a 203k consultant to oversea the project.

203k streamline mortgages allow for mostly cosmetic renovations and basic repairs. The maximum amount of cash you can receive with a streamline loan is $35,000. You can also do the work yourself and not hire a HUD contractor.

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203k Streamlined Requirements

The property has to meet FHA 203(k) eligibility standards. The borrower also needs to meet the 203k eligible criteria set forth by the Federal Housing Administration.

  • Only FHA-approved Lenders can offer 203k streamline loans
  • No foreclosures, bankruptcies, or short sales in the past 3 years
  • Must be able to prove income. (w2’s, tax returns, bank statement)
  • Downpayment of 3.5%
  • Minimum 640 credit score
  • Stable employment history
  • No more than 1 late payment in past 12 months

Type of Work Allowed

  • Roofs, gutters and downspouts repairs and/or replacement
  • Floors
  • Appliances
  • Decks, patios, and porches can be repaired, replaced, or installation
  • Repair HVAC systems
  • Weatherization
  • Door, window, exterior siding repair and replacement
  • Well repair/replacement
  • Accessibility improvements
  • Stabilization of lead-based paint
  • Plumbing and Electrical repairs
  • Paint
  • Basement water-proofing

Type of Work Not Allowed

  • Major repairs needed to the structure or foundation
  • No repairs can take longer than 3 months to complete
  • Any construction that is not a part of the property
  • The building of a new pool or hot tub
  • Adding new rooms or bathrooms
  • Renovations requiring detailed

FHA 203k for First-Time Homebuyers

The FHA 203k streamline program is great for first time homebuyers because of the low down payment requirements. However you don’t have to be a first-time buyer to get 203k financing It’s not eligible for investment properties, and you must be purchasing the home as your primary residence.

Eligible Property Types

  • Single-Family Homes
  • 1-4 unit mute-family homes at least one year old.
  • 1-4 building condominiums
  • Units off-site that can be moved to a property
  • Single unit homes/condos that have been converted into a 2-4 unit dwelling
  • Homes that have been demolished but have the original foundation in good condition
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Streamline 203k Guidelines

  • Minimum loan amount is $5,000
  • Maximum cash for repairs is $35,000, or;
  • Up to 110% of the purchase price of the home
  • Must meet the FHA loan limit guidelines
  • The home can’t be vacant for a period of more than 30 days
  • Construction is required to be completed within 6 months.
  • Occupying borrower only
  • Not available to real estate investors
  • All repairs and renovations must be finished 1 month before closing

If you Apply for a 203k loan for $5,000 to $15,000

  • The mortgage company does not need to inspect the completed construction
  • A third party is not required to inspect the project either
  • Contractor receipts will qualify as completed construction

Search for 203k Streamline Loans: Get Approved for 203k Loans

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