FHA Streamline 203(k) Expert

FHA Rehab Loans are for almost every home

Because FHA home loans are for the larger majority of properties so are FHA rehab loans like the FHA 203k or the FHA 203k streamlined. This is also called a home renovation loan. Here are some bullet points about them:

• Maximum loan amount based on the HUD MSA numbers
• Require FHA mortgage insurance but
• Only require a maximum of 3.5%
• Still have low interest rates
• Allow for purchasing of a property that needs rehab
• For primary residence only, no investors or second homes
• Available in 30 year or 15 year fixed terms
• Does require good credit
• Does require good, steady income

Most lenders do not require an application fee so call around and see who has the best information for you.

FHA has not increased down payment for …

Buyers with a middle score of 580 or higher will not be required to pay a higher down payment. Only buyers who have a 579 or lower middle score will be required to pay a down payment minimum of 10%.

The flip side of this is very few lenders, if any, are approving applications for buyers who have a 619 or lower middle credit score.

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What is the Application Fee for an FHA 203(k) Streamline?

Many lenders charge from $500 to $2000 “application fee” to work on your FHA 203(k) streamline renovation loan. At others there is no application fee, no lock fee, no other upfront fees.

Some competitors say, “we’re not willing to take that much risk and invest that much in time and resources.” Others say, “we believe in our home owners that they are being forthright and deserve our full respect.”

The truth is there is a great deal of investment made by lenders to qualify home owners for an FHA 203(k) home renovation loan and it is possible that, for one reason or another, they may never be compensated for their time and that is a risk they are willing to take on you.

What Is The Repair Cost Limit on FHA 203(k) Streamline?

The FHA 203(k) streamline home mortgage will allow you to purchase a home and do up to $35,000 worth of rehab work. You cannot add space but you can do just about anything to the existing space. You can also add up to $8,000 in energy efficient upgrades by including the EEM/FHA guidelines.

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The $8000 First Time Home Buyer’s Tax Credit and the FHA 203(k) Streamline

The answer is, “yes”.

And the question, of course, is “can I still be eligible for the $8000 first time home buyer’s tax credit if I use the FHA 203(k) streamline to buy my first home?”

The eligibility for the first time home buyer’s tax credit is based on whether or not you (or your partner if there are two borrowers) have owned a primary residence within the last 36 months. If you make it over that first hurtle then there is the income threshold.

You must still CLOSE on the purchase before December 1, 2009. With an FHA 203(k) streamline you can still have the work completed after the closing date. In fact you always have the work completed after the closing date.

A single borrower may earn up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit. Check with your tax professional for full details but these are the IRS guidelines.

What is an FHA 203(k) Loan?

FHA 203(k) loans are designed primarily for home owners purchasing a home which needs rehab work and the loan includes certain types of rehab costs. The most common FHA rehab loan for home owners (home buyers) is the FHA 203(ks) with the “s” denoting streamline.

Unlike the FHA 203(b) streamline refinance the 203(k) requires full documentation from the applicant to prove income, assets and credit history.

The FHA 203(ks) allows up to $35,000 in non-structural and certain non-plumbing/electrical repairs. You can also combine this loan with the Energy Efficient Mortgage and add another $8000 in rehab/upgrades provided those upgrades are acceptable energy efficienty improvements.

You can find some details about the FHA 203(k) from the HUD site but be careful about some of the information provided by non-HUD approved resources.