The Federal Housing Authority is now offering a streamlined version of its FHA 203k program. The new program is called the Streamlined K and makes it easier for homebuyers to purchase a home in need of some repair, but not a major renovation.The Streamlined K program also allows for 110% financing to allow for replacing items such as a furnace which often are not included as "value added" improvements, but may be needed as well as costly items.
The Streamlined K allows for financing of up to 35K in home repairs to be financed into a home loan purchase. There are restrictions on the homeowner doing the work themselves as well as restrictions on what types of repairs are allowed. Typically, a licensed contractor is required to perform the necessary work.
The lender also must determine if the contactors bids fall within a reasonable cost of what the reapirs normally are in that particular market. The financeable repairs are also based on a "subject to completion" appraisal report.
The main benefit of this program is that buyers will not encounter a "cash crunch" after closing on their home due to making minor repairs.
Previously, an FHA 203k was required to finance home repairs. The process often proved tedious as many incremental inspections were required to complete the transaction. The streamlined version simplifies the process and sometimes does not require a lender inspection. The inspection requirement generally is waived if the repairs are under 15K.
