What items remain ineligible for the Streamlined (k) program?
FHA's Streamlined 203(k) program permits homebuyers to finance up to an additional $35,000 into their mortgage to improve or upgrade their home before move-in. With this product, homebuyers can quickly and easily tap into cash to pay for property repairs or improvements, such as those identified by a home inspector or FHA appraiser.
A question that has consistently come up over the past few weeks has been related to 203k streamlined repair exclusions.
Per HUDs' Mortgagee letter 2005-50, the following information will help identify what is not covered if you are applying for a 203k Streamlined loan.
Properties that require the following work items are not eligible for financing under the Streamlined 203(k) program:
- Major rehabilitation or major remodeling, such as the relocation of a load-bearing wall;
- New construction (including room additions);
- Repair of structural damage;
- Repairs requiring detailed drawings or architectural exhibits;
- Landscaping or similar site amenity improvements;
- Any repair or improvement requiring a work schedule longer than six (6) months; or
- Rehabilitation activities that require more than two (2) payments per specialized contractor.
Mortgagors may not use the Streamlined (k) program to finance any required repairs arising from the appraisal that do not appear on the list of Streamlined (k) Eligible Work Items or that would:
- Necessitate a “consultant” to develop a “Specification of Repairs/Work Write-Up”;
- Require plans or architectural exhibits;
- Require a plan reviewer;
- Require more than six months to complete;
- Result in work not starting within 30 days after loan closing;
- Cause the mortgagor to be displaced from the property for more than 30 days during the time the rehabilitation work is being conducted. (FHA anticipates that, in a typical case, the mortgagor would be able to occupy the property after mortgage loan closing).
Advanced Restoration Corporation is a full-service restoration contractor with the ability and 203(k) knowledge to provide complete Rehabilitation & Restoration services to your new home!
For more information about 203(k) loans and partnering with Advanced Restoration, please contact Gary Matzelle at (516) 903-4107.