Financing

When thinking about buying a home that is in need of a few repairs, there are a small handful of options available. The most popular ones include the Fannie Mae HomePath Renovation loan (for homes that are owned by Fannie Mae), the FHA203k Streamline loan and the FHA 203k loan.

Many times when thinking about the FHA 203k loan program I am asked “what is the difference between the FHA 203k Streamline and the FHA 203k program?” and although the answer can be somewhat complicated, there is one magic number that separates the two.

FHA 203k Streamline vs FHA 203k: The Magic Number

The magic number that separates the Arizona FHA 203k streamline program from the FHA 203k “regular” program is $35,000. $35,000 is the amount of money that you can set aside for repairs under the FHA 203k streamline program and anything over that will mean that you need to try to qualify for the FHA 203k regular program.

FHA 203k Streamline Common Repairs

Many lenders will only underwrite the FHA 203k streamline program and the FHA 203k streamline program has some distinct advantages when considering rehabilitation financing. Some of the most popular repairs under the FHA 203k streamline program include:

• Repair gutters and downspouts
• Repair/upgrade of existing HVAC systems
• Minor repairs of plumbing and electrical systems
• Minor repairs of existing flooring
• Minor remodeling that does not involve structural repairs
• Exterior and interior painting
• New appliances – which may include free-standing ranges, refrigerators, washers/dryers, dishwashers and microwaves but may not exceed $2,000
• Improvements for accessibility for people with disabilities

FHA 203k Streamline: Popular Reasons to Choose

There are several popular reasons to choose the FHA 203k Streamline over the FHA 203k loan, and here are just a few:

• There is no minimum threshold for amount of money for repairs (note: some lenders require a minimum, but not all)
• Maximum allowance of $35,000 includes a 10% contingency for cost over-runs
• General contractors / consultants are not required
• Lender is responsible for ensuring cost to repair is reasonable for the area
• Architectural exhibits are not required

More Information:

HUD 203k Streamline Mortgagee Letter

HUD 203k “Regular” Mortgagee Letter

For more information or to see if you qualify contact Justin McHood at 480.374.0303

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