The FHA Limited 203k (previously known as the FHA 203(k) Streamline) simplifies the loan process by not requiring the extra cost and details found in its counterpart, the FHA 203k loan (aka full 203k, consultant 203k, standard 203k).
This loan program is available for customers looking to fix up their primary residences or purchase a primary residence. It is not available to investors who will not be living in the property.
The program is for single-family, owner-occupied properties, as well as condominiums/town homes and multi-family properties of up to 4 units plus mixed use properties (great niche’s).
The FHA Limited 203k loan was designed to purchase or refinance properties that required light or cosmetic repairs. For this reason, the program has a cap of $35,000 for repairs and other costs (cost should actually be closer to $30,000). There is no minimum repair cost for this loan. Other costs include the loan’s closing costs, up to two inspections fees, a certified inspection report and a supplemental origination fee.
Rehab work must commence within 30 days after closing and must be completed within 6 months. The homeowner cannot be displaced from the house for more than 30 days during this 6-month period.
AnnieMac Renovation Lending does not allow for “Self-Help” projects. We require a general contractor or up to 3 specialized contractors. Any contractors working on the home must be licensed and insured. In addition, they must complete a W-9 prior to closing. AnnieMac Renovation Lending will do a verification and check references to ensure that we only use top quality contractors who can complete the work as specified.
The FHA Limited 203k loan cannot be used for repairs that HUD considers to be ‘major’. This includes any new construction to the property, such as adding on a new room. It cannot be used to finance any structural repairs needed on the property. All rehab work must be completed within 6 months. It does not provide for landscaping.
The homeowner cannot get any cash out on this program since it is designed for purchase, rate, and term refinances only.
The outstanding mortgage balance cannot exceed the purchase price of the house. Monies designated for the rehab are held in escrow. The money is paid out after the work is complete during specified milestones. Any excess funds in escrow after the work is complete will be applied to the principal balance or used for changes.