FHA 203(k) Streamline Loans


This is not actually a refinancing product, but a rehabilitation loan, offered by the FHA, that allows for remodeling, reconstruction, or repairs on a home. Often a borrower will find a home that would be ideal for their needs; it has the right location, the right size, and the right amenities, but it isn’t quite move-in ready. Perhaps the roof needs to be replaced or the plumbing needs to be updated. Perhaps the electrical system needs to be brought to current code. Either way, a rehabilitation loan gives borrowers the money they need for the purchase of the property and the money they need for rehabilitating the house. In many cases, this means they are getting a loan with an LTV above 100%, possibly 110% or even 125%.

203(k) loans allow borrowers to take out an additional $35,000 for the repair and renovation of a property. However, they can have a difficult approval process. There is a lot of paperwork involved, and you must go through an extensive process to get the money needed for renovations. Like FHA Streamline Refinancing, FHA 203(k) Streamline loans seek to expedite the process, allowing for faster approval.

To be approved, you simply need to meet these requirements:

  • Work with an FHA-approved lender

  • Have no foreclosures or bankruptcies in the past 3 years

  • Have a provable income and stable employment history

  • Bring a down payment of 3.5%

  • Have a minimum credit score of 640

  • No more than one late payment over the past year

With the $35,000 that you can get for repairs, you have the option of performing many projects, including:

  • Roofing, gutters, siding, and soffits replacement or repair

  • New roof installation or roof repair

  • Flooring installation

  • Purchase and installation of new appliances

  • Heating, air conditioning, or duct repair

  • Door or window replacement

  • Lead-paint mitigation

  • Plumbing repairs or installation

  • Electrical updates

  • Waterproofing for basement

With 203(k) Streamline, certain projects are not allowed, including:

  • Repairs to the foundation

  • Projects that will take over three months

  • Construction that is not part of the property in question

  • New room additions (including bedrooms, bathrooms, living rooms, etc.)

  • Pool or hot tub construction and installation

In the past, there was a minimum of $5,000 to use 203(k) Streamline, but that has been eliminated.