Understanding FHA-203K Streamline Loans

When they Apply to Foreclosures


QUESTION: What repairs are eligible under the FHA Streamline 203K?

Streamline or Reg FHA-203K?



Answer: The following repairs are eligible under this program:

1. Repair/replacement of roofs, gutters, downspouts

2. Repair/replace/upgrade of existing HVAC (Heating, Ventilating & Cooling) Systems

3. Repair/replace/upgrade of plumbing and electrical systems

4. Repair/replacement of existing flooring

5. Minor remodeling, such as kitchens and baths

6. Weatherization that includes storm windows and doors, insulation, weather stripping, etc.

7. Non-structural improvements for accessibility for persons with disabilities

8. Discretionary repair items that may not have been included in the appraisal, such as repair of exterior decks, basement waterproofing, etc.

QUESTION: Is the FHA 203K Streamline for purchases only?

Answer: NO, the this type of FHA-203K may be used for a purchase or a refinance. It may also be used to purchase a REO (Real Estate Owned) Property.

QUESTION: Who is responsible for repairs?

Answer: The homebuyer/owner pays for the repairs from the loan proceeds. The repairs CAN begin after the loan is closed. You can but do not have to use a general contractor since the repairs will be minor. You may hire a contractor or perform the work yourself as long as it is done in a timely manner.

QUESTION: Do I have to hire an FHA Inspector?

Answer: No. To eliminate the need and cost for an inspection of the completed repairs, the lender MAY accepts receipts from the contractor or PROOF of completion of the work to the homeowner’s satisfaction.

QUESTION: What repairs are NOT allowable?

Answer: Repairs that are considered major rehabilitation or requiring structural modification. You need to use the regular FHA 203K program for these properties. Up to TWO payments may be made to the contractor or homeowner.

QUESTION: How much down payment do I need?

Answer: As with most FHA Mortgage Loan Programs, the minimum investment is 3.5%. Most Construction fees (i.e. loan discount points, title update costs, permit costs) may be financed in the Loan.

If you need more information contact a certified FHA Mortgage lender or broker.


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