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An important tool for community and neighborhood revitalization in Minnesota, Wisconsin, and South Dakota is the FHA 203(k) streamline program, which allows you to buy, and get the money to repair a home all in one easy mortgage loan.
There is no doubt that the current real estate market offers a lot of great bargains on bank owned, foreclosed, REO, and repo'd homes. However, many of these homes are in less than perfect condition. Many just have cosmetic issues, like ruined carpet and flooring, holes in the wall, or in need of painting, etc. Others need a new roof, or the previous owner vandalized the house, leaving them with missing cabinets, or missing appliances.
This is where the little known program called the FHA 203K Rehab loan comes in. The FHA 203K Rehab loan is becoming very necessary for the purchase of many Bank Owned, REO, or Repo properties in need of repair to come back to their full glory. FHA 203K streamlines loans make the process of buying a home that needs a little TLC (or quite a bit in some cases!) easier, more affordable, and quicker.
Made available to certain lenders by the U.S. Department of Housing and Urban Development (HUD), the FHA 203(k) program has provides many home buyers with the funds necessary to buy their first home, or greatly improve a current home. The FHA 203(k) loan is available to borrowers of all income levels, to homeowners who plan to occupy the house, and for homes with one to four units.
FHA standard guidelines
Standard FHA down payment of just 3.50%
Flexible credit qualifying (you don't need to be perfect, but bad credit is not acceptable)
The loan is assumable for future owners
Finance up to 6 months of mortgage payments while repairs are done
Purchase and Improve all in one easy new loan
These two 203k loans are known as either a Full 203k, or a Streamline 203k. A Full 203k is for repairs OVER $35,000. Few lenders offer the full program due to it's risk and complexity. Streamline 203k on the other hand is for repairs UNDER $35,000, and is offered by many FHA lenders, including us at Mortgages Unlimited.
Mortgages Unlimited OFFERS both full and streamline, but streamline works for the vast majority of home repairs, and is the focus of the rest of this web page. These loans offer the ability to finance upfront up to $35K in upgrades to rehabilitate a home. These are offered up to the maximum FHA loan limit in your county.
FHA 203K Streamline program
allows the homebuyer to put up to $35K of rehab work into the new loan. The loan
closes JUST ONE time. It is your loan term permanent form of financing. It is
NOT a short term construction loan. The Streamline program
should not be confused with the more complicated FHA 203K rehab loan, which can
accommodate major remodels, major damage repair, storm damage, etc. The FHA 203K
Streamline rehab loan is just that - Streamlined. Please call (651) 552-3681 if
you desires a full 203k loan.
This loan can help with new paint (in/out), new siding, new roof, new flooring, new appliances, HVAC repair/replacement, electrical & plumbing repair & upgrades, new windows, decks, porches, patios, minor kitchen remodels, & more.
What the streamline loan can't cover is landscaping, structural damage, foundation work, room additions, load bearing wall changes, etc.
There is no HUD consultant or general contractor required on the 203k streamline. However, we do suggest using a general contractor with a strong track record to ensure that your work is done & done right. You can have up to three contractors, but we prefer you use just one.
Owner Occupants - Purchase - Refinance
Investors NOT allowed
30 or 15 year fixed rates
One year ARMS
Assumable to a qualified buyer, with no money down
Single family dwellings
1-4 Unit buildings
Repair/replace roofs, gutters, and downspouts
Repair/replace/upgrade existing HVAC systems
Repair/replace/upgrade plumbing and electrical systems
Repair/replace/upgrade flooring and carpets
Minor remodeling, such as kitchens and bath (which does NOT involve structural repairs)
Painting - Both interior and exterior
Weatherization, including storm windows and doors, insulation, weather stripping
Accessibility improvements for persons with disabilities
Lead based paint abatement
Basement finishing and remodeling (which does not involve structural repairs)
Septic system replacement / upgrade
Mold abatement / remediation
Major rehabilitation or major remodeling - such as tear down or relocation of walls
New construction - like room additions
Repair of structural damage
Any repairs requiring drawings or architectural exhibits
Landscaping or irrigation systems
Any repair that would take longer than 6 months
Luxury items are not eligible (like hot tubs, swimming pools, patios, decks)
The appraiser will be given a copy of your repair bids along with the purchase agreement. The appraiser must say that the after improved value of the home will equal at least the combination of the repair and purchase price. For example, if the purchase price is $100,000, and your repairs are $25,000. The appraiser must say the house will be worth at least $125,000 when the repairs are done.
Contingency reserve is automatically built into the loan (10-20% of repair costs)
Up to 6 months mortgage payments
Inspection and title update fees
Here are a few suggestions to get you started on buying and fixing the perfect house:
First get pre-approved for a basic FHA loan
Start looking at homes.
If you find one in need of repair, obtain bids for the required repair work
TIP: DO NOT BUY THE HOUSE WITHOUT HAVING BIDS FIRST ! ! !
With the estimate and purchase price, now as your Realtor "Will the house appraise for the purchase price plus repair cost when repairs are completed?"
If No: Pass on the house and find something else
Submit your purchase offer
Once your offer is accepted, contact us to guide you the rest of the way.
NOTE: We offer USDA, VA and FHA Loans. While we are an approved lender, we are not part of HUD, FHA, The United States Government, or the Department of Veteran Affairs. We are not acting on behalf of, or under the direction of HUD/FHA or the Federal Government. FHA and VA do not lend directly to the public, only through approved lending institutions like Mortgages Unlimited.
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Our services available only for properties located in Minnesota, Wisconsin, and South Dakota. PLEASE DO NOT KEEP US A SECRET from your FRIENDS. Licensed as Mortgages Unlimited, Inc. NMLS #225504. As a Lenders One partner, we are part of the 3rd Largest Retail Mortgage Originators in the country. We are consistently ranked as one of the top mortgage lenders in Minnesota by Minneapolis St Paul Business Journal. Any use or duplication of any materials is strictly prohibited. All images, text, and materials Copyright © 1998-2014 Joe Metzler. This is the private web site of Joe Metzler, NMLS #274132. All Rights Reserved.