203K Rehab Loans

Understanding Streamline 203(k) Loans

Program Highlights

• FHA Renovation Program
• Simplified process!
• Up to $35,000 in repairs with no minimum!
• No consultant required
• Up to 50% of cost up front for materials
• Two draws per contractor

Elibible Properties

• 1-4 unit properties
• Town houses
• Condos (interior only)
• Row homes
• HUD Repos

Common Improvements

• New free standing appliances
• Interior and exterior painting
• Flooring, carpeting and tile
• Energy efficient improvements
• Other improvements that are a permanent part of the real estate

Other Eligible Improvements

• Changes to eliminate obsolescence and reduce maintenance
• Modernize plumbing, heating, AC and electrical systems
• Install or repair well or septic system
• Roofing, gutters, downspouts
• Lead based paint abatement

Calculating Loan Amount

• Use Maximum Mortgage Worksheet
  • Purchase price or existing debt
  • Cost of repairs
  • Contingency Fund (optional)
  • Inspection fees and title updates
  • Permit Fees
  • Supplemental Origination Fee (2.5%)
• Compare to 110% of after-improved value

Who Can Do the Work?

• Borrower can select their own contractor
  • Should be licensed and insured if required by municipality
  • Should be able to document qualifications
• Borrower can do their own work only if they can document their qualifications

Getting them Closed

• Borrower collects contractor bids
• Bids are used to order appraisal
• Appraiser will do subject-to appraisal
  • VC sheet will list improvements and cost
  • Any items on VC sheet should be addressed
• Borrower and contractor sign contract

What Happens After Closing?

• Work begins
• Up to 50% can be paid for materials
  • Invoice needed
  • Contract from contractor
• Title update will be needed
• Final inspection will be done to ensure workmanlike completion of work

What makes the Streamline K Better in Todays Market

• Much faster process to get to closing
• Include appliances and cosmetics
• Up to 110% of after-improved value
• Overcome borrower concerns about property
• Get a better price on a tired home - Then make it your own!