SACRAMENTO - FHA REHAB LOAN - FIXER UPPERS - 203k vs 203k streamline

There has been some talk about these two programs lately. I'm actually surprised that more people don't get involved in the FHA rehab loan. It seems like in todays market place with so many bank owned homes that need some serious TLC, an FHA rehab loan would be perfect. This blog is dedicated to explaining the new streamline program.

Up until last year, all we had available was a 203k. This ranged from anything minor to major rehab work. You could literally tear down a house down to its foundation and, future value permitting, build a new structure. That is still available. With the introduction of the 203k streamline, FHA took some of the headaches out of the traditional 203k for projects that are "cosmetic." As long as an engineer/architect is not involved, you can do a streamline up to $35,000 which would be disbursed for work done after closing. Also, you can go up to a loan amount of 110% of appraised value. Most people have never heard of a 203k(s) yet alone tried to do one. As far as banks and brokers that do these, there are few far and between.

203k STREAMLINE

• Used for minor cosmetic work
• Should ideally be used for no more than 3 jobs total
• No consultant / engineer / architect required
• Property cannot be vacant for more than 30 days.
• Work must be completed within six months.
• Work must be professional.
• If job requires a permit, borrowers must get a permit and a sign-off.
• Work must commence within 30 days from closing.

Eligible Repairs & Improvements

• Roofs, gutters and downspouts
• HVAC systems (heating, venting and air conditioning)
• Plumbing and electrical
• Minor kitchen and bath remodels
• Flooring: carpet, tile, wood, etc.
• Interior and exterior painting
• New windows and doors
• Weather stripping & insulation
• Improvements for persons with disabilities
• Energy efficient improvements
• Stabilizing or removing lead-based paint
• Decks, patios, porches
• Basement completion and waterproofing
• Septic or well systems
• Purchase of new kitchen appliances or washer / dryer

Repairs Not Permitted

• Landscaping or yard work
• Major remodeling
• Moving a load-bearing wall
• Room additions or add-ons to the home
• Fixing structural damage

Disbursement of Payments

• Maximum of two payments to each contractor, including the borrower, providing the borrower works under a "self help" plan.
• No more than a 50% advance is allowed.
• Do-it-yourself allowances do not include labor; only materials costs are allowed.
• Final payment is paid after submission of evidence of payment to sub-contractors / suppliers or other possible lien claimants.

Good Luck and as always feel free to contact me directly with any questions you might have regarding my postings or products!