You found a house you want, it is in good condition, yet there are just some things that are not jiving with you. This is the perfect example of a great home for a 203K loan. The streamlined loan does not require nearly as much work as the standard 203K and it allows you the opportunity to change those little things that you do not like!
What is the 203K Streamlined Loan?
The 203K Streamlined loan is a simpler version of the standard 203K. The stipulations are a little different, namely how much you are able to borrow. The standard 203K allows you to borrow as much as 110% of the projected value of the home, which is the value after the work is completed. The streamlined version is maximized at $35,000 in repairs, which if you are making minor repairs, is more than enough! Another major difference with the streamlined version is the lack of a need for a loan consultant, which you can decide if you want or not. This professional is required in the standard version because of the major work that is completed, but with the streamlined version it is not a necessity because there are not architects, engineers, and structural changes involved in the plans.
Ideas for a Streamline 203K
There are many ways that you can use this version of the FHA loan. It is mostly used for cosmetic changes. For example, if you love the layout of a home and it does not need any rehab work, yet the paint colors make you cringe, you can use this loan to have the entire home repainted – either inside, outside or both! Other ideas include changing out the flooring, new appliances in the kitchen, lighting changes, adding a porch or deck, finishing a basement (non-structural changes) or changing the windows.
Each of these ideas will make the house exactly what you want and not require you to have two separate loans or come up with large amounts of cash. As you can see, the changes do not need to be major, but can still qualify you for these great FHA loan.
This opens up many opportunities for home buyers that would otherwise walk into a home and hate one thing about it, forcing them to pass on the home because they cannot afford to make the desired changes with money out of their pocket at the moment. With the streamlined 203K, you are able to roll the cost of the repairs into the loan, allowing you to pay it off over the life of the loan, which is typically 30 years. With low interest rates and minimal closing costs, this turns out to be the most effective way to rehab a home, making it exactly what you desire.
No Structural Work
The largest caveat with this loan is that no structural work can be completed. This means no tearing down walls, fixing damage that affected a structure, room additions, or having any type of work done that requires an architecture or engineer. The work should be simple in nature and simply enhance the cosmetic appearance of the home.
If you are shopping for a home, don’t forget about the 203K streamline process. It is a great way to make changes to a home that you would otherwise love if these minor cosmetic issues were changed. It is amazing how much a coat of paint, a new floor, or new lighting can change the entire appearance of a home. Try to overlook the minor things and think of the big picture – if the layout and structure is suitable to you, the rest can be changed with the streamlined 203K loan.