203KS or 203K streamline loans

FHA has long been known as something Realtors® seem to avoid for one reason or the other. While FHA has loosened up some of their guidelines on FHA loans, the stigma remains and I've had some Realtors® tell me sellers would prefer cash offers and conventional offers first. The cash offers are a given, but conventional guidelines today have become so difficult to predict and so strict that you can't automatically consider that the better option. That doesn't mean that there isn't a better option. 203KS or 203K streamline loans have become a favorite in today's lending environment because it allows you to maintain the less stringent guidelines and bring the property up to FHA standards or better yet, up to your standards.

The 203KS is the little brother to the standard 203K loans. The repairs allowed are not major and the maximum cost for the repairs can be no more than $35,000. 203KS loans are perfect for that home that is beaten up enough to be out of grasp for a regular FHA loan. The program allows the buyer to obtain an estimate from a contractor indicating the work needed to bring the home to living condition all while financing the work and adding value to your newly acquired property. FHA guidelines apply to the program including the 3.5% down payment requirement. Except this time the 3.5% down payment is calculated by adding the sales price and repairs or alteration costs and taking the percentage from there. So it would work as follows:

Sales price - $300,000
Repairs or Alterations - $35,000
Total - $335,000
Down payment - 3.5% of $335,000 = $11,725

The other difference from a traditional FHA loan is the addition of a Licensed Contractor who provides an estimate and description of the work being done. The estimate then gets plugged in to a worksheet and that's how the numbers are determined. Your Mortgage Expert should be able to help with that. The rest of the process will work exactly like any standard FHA loan would.

This program should prove to be helpful for anyone involved in the home buying process. Lenders can provide more loans to more borrowers by offering an extra service. Realtors® should be able to move homes faster and not have to worry too much about the condition of the homes and home buyers can not only bring the house up to code, but also make financed improvements to their homes they would otherwise have to pay for out of pocket.

Here is a list of allowable repairs or alterations using the 203KS program
OWNER OCCUPIED PROPERTIES ONLY

· Repair/Replacement roofs, gutters, and downspouts

· Repair/Replacement/Upgrade of existing HV AC systems

· Repair/Replacement/Upgrade of plumbing and electrical systems

· Repair/Replacement of existing flooring

· Minor remodeling such as kitchens, which does not involve structural repairs

· Exterior and interior painting

· Weatherization: including storm windows and doors, insulation, weather stripping, etc.

· Appliances - Purchase and installation are included. Appliances may include free-standing ranges, refrigerators, washers/dryers, dishwashers, and microwaves

· Lead-based paint stabilization or abatement of lead-based paint hazards

· Repair/Replace/Add exterior decks, patios, porches

· Basement finishing and remodeling, which does not involve structural repairs

· Basement waterproofing

· Window and door replacements and exterior wall re-siding

· Septic system and/or well repair or replacement

· Improvements for accessibility for persons with disabilities

• for lead-based paint stabilization costs above and beyond that paid for by HUD when it sells real estate owned (REO)