The Idaho FHA 203k Streamline Vs. Regular 203k Rehabilitation Loans. Great for Bank-Owned properties, Foreclosures, Short Sales and Fixer Uppers!! There is a big difference between the 203k streamline and the regular 203k rehabilitation loans. Below I have a Frequently asked Questions and answers section that should answer many of the questions you may be wondering about.
Q: What is the difference between the streamline 203k and the regular 203k?
A: The streamline 203k has a cap of $35,000 including fees, with no minimum repair cost. It is designed as a “refurbish and rehab” loan for borrowers to finance non-structural and cosmetic repairs only. The full 203k may be used for structural repairs and room additions as well.
Q: Can the $35,000 cap on repairs be exceeded by soft costs?
A: No- the streamline 203k caps at $35,000 including all costs.
Q: Define soft costs?
A: Soft costs are the closing costs associated with the 203k loan – they include up to 2 inspection fees (approx $150/each), and appraisers compliance inspection report (approx $125) a supplemental origination fee (the greater of $350 or 1.5% of the rehab costs, and a contingency reserve of 10% – to be determined by the underwriter).
Q: What are the down payment requirements on the streamline 203k ?
A: Standard FHA – Maximum LTV is 96.5% for purchases and 97.75% for rate & term refinances.
Q: Can the borrower receive any cash out on this program?
A: No – the streamline 203k loan is for Purchase and Rate & Term refinances only.
Q: Can the borrower be reimbursed for any funds spent prior to closing the loan?
A: No
Q: What types of properties qualify under this program?
A: Single Family Residences, condons, PUD’s and 2-4 units.
Q: Is this allowed for new construction properties?
A: No the property must be existing at least 1 year old to be eligible for the streamline 203k.
Q: Can this loan be used for someone with a non occupying co borrower?
A: Yes – the credit piece of this loan is the same as an FHA 203b – standard FHA qualifying
Q: Is there special verbiage required on the purchase contract for the streamline 203k?
A: No the streamline 203k is not typically part of the purchase contract although it does require the property be available for the inspections to complete the bids for the work to be completed. It is necessary on a purchase that the seller be cooperative with access to the property.
Q: How long does the borrower have to complete the work?
A: The work must begin within 30 days of the loan closing, and be completed no later than 6 months from loan closing.
Q: Does the borrower have to occupy during the entire time of the rehab?
A: The borrower can not be displaced from the property for more than 30 days during the allowable 6 month rehab time.
Q: Can the borrower do their own repairs on the streamline 203k?
A: Only if the borrower is qualified ( works in the construction trades, is a licensed contractor, etc) and completes the self help forms.
Q: What are the requirements for a contractor?
A: Contractors must be licensed and bonded. The contractor will be required to complete a W9 prior to closing.
Q: What happens to any leftover funds after the repairs are complete?
A: Any excess funds after the work is completed will be applied to the principal balance.
If you have any questions about the FHA 203k Rehabilitation loan programs please feel free to contact me.
Michelle Guth
Diversified Mortgage Group
Mortgage Consultant
Direct: 208-853-7878
Michelle@dmgloans.com
ID MBL-5696 / NMLS # 36853 / 36852 / 1850
www.idahohomegroup.com
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