When you’re searching for a home these days you’ll find some that meet your needs but they need work or have been vandalized. If you’re getting an FHA loan then you may not be able to purchase these homes. However, there is an excellent program that you can use for these homes. It’s called the FHA 203k Streamline Mortgage.
Who is Eligible? This program is for buyers that are purchasing for their primary residence. It’s also available for owner occupants that want to refinance their current home. Nonprofit organizations can also qualify for this loan program. It is not available to investors who will not be living in the property.
What properties are available ? The program is focused on single-family, owner-occupied properties, but it is not limited to those. Buyers can also use this loan to purchase condominiums or town homes. It can be used to purchase multi-family properties of up to 4 units.
What are the loan requirements ? The FHA 203(K) Streamline loan was designed for properties that required light or cosmetic repairs. For this reason, the program has a cap of $35,000 for repairs and other costs. There is no minimum repair cost for this loan. Other costs include the loan’s closingcosts, up to two inspections fees, a certified inspection report and a supplemental origination fee. The loan can be either a fixed-rate loan or an adjustable-rate mortgage (ARM). The outstanding mortgage balance cannot exceed the purchase price of the house. The money designated for the rehab are held in escrow and is paid out after the work is complete. Any excess funds in escrow after the work is complete will be applied to the principal balance.
What are the rehab requirements? The rehab work must commence within 30 days after closing and must be completed within 6 months. Contractors must be licensed and bonded. The FHA 203(K) Streamline loan cannot be used for repairs that HUD considers to be ‘major.’ This includes any new construction to the property, such as adding on a new room. It cannot be used to finance any structural repairs needed on the property. All rehab work must be completed within 6 months. It can not include landscaping. If you’d like to learn more about rehab financing we’d be happy to answer any questions you may have. Just give us a call or send us an email. We’re ready to help !