Home Buying in 40220>Question Details

Atonini, Home Buyer in Fairdale, KY

can i qualify for a fha 203k rehab loan in my name if my husband soley owns a house with a fha loan?

Asked by Atonini, Fairdale, KY Sun Aug 5, 2012

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FHA 203k Kentucky FHA Loan Guidelines

1.Q: What is the difference between the streamline 203k and the regular 203k?

a: The streamline 203k has a cap of $35,000 including fees, with no minimum repair cost. It is designed as a “refurbish and rehab” loan for borrowers to finance non-structural and cosmetic repairs only. The full 203k may be used for structural repairs and room additions as well.

1.Q: Can the $35,000 cap on repairs be exceeded by soft costs?

a: No – the streamline 203k caps at $35,000 including all costs.

1.Q: Define soft costs?

a: Soft costs are the closing costs associated with the 203k loan – they include up to 2 inspection fees (approx $150/each), and appraisers compliance inspection report (approx $125) a supplemental origination fee (the greater of $350 or 1.5% of the rehab costs, and a contingency reserve of 10% – to be determined by the Underwriter).

1.Q: Can the borrower bring in cash for repairs that exceed the maximum $35,000 cap?

a: No – if the rehab amount exceeds $35,000 including costs, the loan is not eligible for the streamline 203k – the borrower may not bring in funds that exceed

1.Q: What are the down payment requirements on the streamline 203k?

a: Standard FHA – Maximum LTV is 96.5% for purchases and 97.75% for Rate & Term Refinances

1.Q: How do you calculate the loan amount on the streamline 203k for purchases and refinances?

a: Purchases- Use the lesser of the “As-Is” value provided by the appraiser, or the sales price of the property – add the cost of the rehab and soft costs – deduct any seller concessions that exceed 6% – compare this to the “As-Improved” value per the appraisal x 110%. The maximum loan amount will be based on the lesser of the 2 calculations. Apply the standard FHA LTV calculation of 96.5%.

a: Refinances – Use the lesser of the “As-Is” value provided by the appraiser, or the current Mortgage balance – add the cost of the rehab, soft costs and allowable borrower closing costs – compare this to the “As-Improved” value per the appraisal x 110% The maximum loan amount will be based on the lesser of the 2 calculations. Apply the standard FHA LTV calculation of 97.75%.

1.Q: Can the borrower receive any cash out on this program?

a: No – the streamline 203k loan is for Purchase and Rate & Term

refinances only.

1.Q: Can the borrower be reimbursed for any funds spent prior to closing the loan?

a: No –

1.Q: What types of properties qualify under this program?

a: SFR’s, condos, PUD’s and 2-4 units.

1.Q: Is this allowed for new construction properties?

a: No the property must be existing at least 1 year old to be eligible for the streamline 203k.

1.Q: Is there any additional Underwriting time required for this program?

a: Normal Underwriting turn times plus 72 hours additional for a 2nd level review of the 203k paperwork will be required.

1.Q: Can this loan be used with the FHA high balance loan?

a: Yes

1.Q: Can this program be used with Down payment assistance programs?

a: Yes – but the DAP must be prior approved by Plaza and their investor

1.Q: Can this loan be used for someone with a non occupying co borrower?

a: Yes – the credit piece of this loan is the same as an FHA 203b – standard FHA qualifying.

1.Q. Can this program be used for investors?

a: No – this is an owner occupied only program. Not allowed for investment properties or 2nd homes.

1.Q: Can an Energy Efficient Mortgage (EEM) be used in conjunction with the streamline 203k program?

a: Yes the EEM may be used in addition to the $35,000 streamline 203k, the borrowers may finance up to $8000 in approved EEM items (Energy Star appliances, dual pane windows, insulation, etc) on top of the $35,000 allowed for the streamline 203k – for a total of $43,000.

17. Q: Can this loan be used in conjunction with the HUD REO program?

a: Yes – but the use of the streamline 203k must be pre-approved by HUD to be used with their REO program.
0 votes Thank Flag Link Thu Aug 30, 2012
Becky is right, if your existing home is in Kentucky the answer is no. The second problem is you already have an owner occupied loan, the 203k is an owner occupied product. If you and hubby are getting a divorce that could change things once you are past the initial stages.

Whatever your plans are, do not try to “work around” the rules. That is the most common question I get when something like this comes up, “How do I work around it?” You don’t.

The SAR procedures that become mandatory for all mortgage lenders next week have already been implemented by most lenders, don’t get caught up in that mess, good luck,

Jim Simms
NMLS # 6395
Financing Kentucky One Home at a Time
0 votes Thank Flag Link Mon Aug 6, 2012
What state do you live in? Some are dower curtesy states meaning you have an automatic interest in your husbands property therefore you will not be eligible for a second FHA loan.
0 votes Thank Flag Link Sun Aug 5, 2012
Hello, we just brought a three plex in Portland area in Louisville Ky. The plan is to live in one unit and rent out the others. There are some works that need to be done since the house has been vacant for four years. We want to know how can we qualify 203k program? We also want to know about the neighborhood stabilization loan program since portland area is on the list.
Flag Sun Jan 26, 2014
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