If you are a first time homebuyer or have never done a remodel, stay away from the full 203(k) loan. The streamline as others have said is limited to 35K of NON-STRUCTURAL work. Rates vary between 6.5-7.25 and you may excercise the Streamline Refinance to gain a normal FHA fixed rate loan after 6 months or so. Plan for a 45-60 day close with the streamline 203(k) and 60-90 with the 203(k) full. The full version is game for anything, right down to a teardown and rebuild from the foundation. However there are many more people involved and many more restrictions.
Please excercise caution. My company has been doing FHA loans for 19 years yet my loan was the first 203(k) funded in 6 years. Anyone familiar with the program is going to be rusty, not to mention, are they true FHA correspondant? (and not a 'consultant' posing as one).
To sum, the 203(k) streamline is not a bad deal. It is very heavily property-driven, so it will take a good appraiser estimate, realistic contractor bid, and competent realtor and loan officer to fully protect your interests.

Mon Apr 21 2008, 16:03

Lots of FHA buyers nowadays are leaning toward the FHA Streamline K loan instead of the 203K, so you might want to talk with a few lenders about this type of loan. There is less paperwork involved and it's an easier loan to process.

There are a few guidelines, of course, such as the home must be owner occupied, it can't be vacant for more than 30 days, you must complete the work within six months and it must be professional work, although, under some situations, you can do the work yourself if FHA agrees. You must start the work within 30 days of closing, obtain necessary permits and sign-offs, but the good news is if your loan is under $15,000, it's even easier because there are no lender inspections nor third-party approvals required.

Some buyers combine the Streamline K with an energy efficient loan, too, which lets you put in central heat and air or purchase appliances.

I work with Evelyne Jamet at Vitek Mortgage, and she handles a lot of these loans. You might try calling her at 452.8800. Or call your mortgage broker and ask.

Thu Apr 17 2008, 14:36

The 203(k) and the Streamline (which I think is an even better option) are both great. Consider the Streamline if you can stay within a $35K budget--it's faster and easier because an independent consultant isn't required. Of course there are a few other restrictions (180 days to complete all work), but an experienced FHA lender and a Streamline administrator can make the process a smooth one. I'd recommend Jodie Kerhlikar at http://www.sacramento-mortgage-company.com if you don't have an experienced FHA lender already.

Good luck and happy homebuying!

Rob McQuade, REALTOR®, Accredited Buyer Representative (ABR)
McMartin Realty | 2031 K St Ste 100 | Sacramento, CA 95811-4253

Tel (916) 444-7577 or Toll Free (866) 720-CITY (2489)
Fax (916) 444-7977

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Thu Apr 17 2008, 14:36