Thinking Of Renovating A Home? An FHA 203k Streamline Loan Might Be Right For You
The idea of buying a fixer-upper and turning it into your dream home can seem like a great idea. The reality, however, may not be so great – starting out. You will soon realize how much it will cost to remodel and you may realize that you can’t afford it or that a lender will not give you a loan because the home is considered “uninhabitable.” That is where an FHA 203k streamline loan may come in handy!
An FHA 203(k)s loan is offered by the Federal Housing Administration, a government agency, which designed these loans to encourage lenders to fund seemingly risky home purchases. The goal was to allow neighborhood revitalization and greater homeownership opportunities. An FHA 203k loan is designed for houses that are damaged or in need of rehabilitation. This loan covers not only the cost of the property but also the cost of necessary home repairs. A vast range of repairs, including bathroom remodeling, roofing, flooring, and air conditioning systems can be funded with this loan.
Often the loan will also include up to 20 percent “contingency reserve” so that you will have the funds to complete the remodel in the event it ends up costing more than the estimates suggested. The remodeling funds include parts and lobor and the work must be performed by a licensed General Contractor.
Which houses qualify for the Streamlined 203(K)?
There are two types of FHA 203k loans, regular and streamlined. The Streamline 203(K) loans are for homes that do not need structural repairs and have limits on the amount of renovations being done.
In order to qualify, homeowners must plan to live in the home they are repairing. The following types of residences qualify:
- Existing construction that is at least a year old.
- Single-family, two-family, three-family or four-family dwellings.
- Condos, if they have been approved for FHA loans.
- Buyer must have a minimum credit score of 640
- Maximum loan amount is $271,050 in the Charlotte area