HUD No. 05-081
June 6, 2005
NEW HOME REPAIR PROGRAM MAKES FHA-INSURED HOME LOANS EVEN MORE ATTRACTIVE
Streamline (K) adds up to $15,000 to FHA mortgages for repairs
WASHINGTON - FHA's new streamline 203(k) Home Repair program will make FHA-insured loans even more attractive by allowing sellers to market their property in "as-is" condition and sell homes to FHA borrowers without making any repairs to their property provided that less than $15,000 in repairs are needed.
In the past, some sellers and realtors have not encouraged prospective borrowers to utilize FHA financing because of concerns about FHA's pre-sale repair requirements. The Streamline(K) Limited Repair program, which became effective today, will help alleviate those concerns by permitting the borrower to add $5,000 to $15,000 to the loan amount and make the required repairs after loan closing. The new product can also be used for other repairs that the new homeowner wants to accomplish without the need for an additional loan.
"The Department is committed to making FHA better, more modern, and more streamlined," said HUD Secretary Alphonso Jackson. "This new mortgage product will help achieve that goal by enabling FHA borrowers to roll into the mortgage both the cost of the home and limited repairs."
FHA's Streamline(k) is intended to assist homeowners with basic repairs and was developed in response to the call for a purchase-rehabilitation loan alternative which is easier to administer, provides shorter processing time frames, and expedites cost estimates and approval.
HUD's original Section 203(k) home rehabilitation program is FHA's primary tool for the repair of single-family properties. Because the 203(k) program has seen success in helping homeowners rehabilitate their homes, the Department has developed a streamline version to help even more Americans.
The Streamline(K) option does not replace the standard 203(k) program, but, delivers an alternative for those homeowners who seek to make the type of uncomplicated repairs which may be accomplished successfully without paid consultants, engineers or plan reviewers.
Repairs under the Streamline(K) program do not require documentation from the borrower other than written estimates from appropriate licensed contractors. To ensure repairs under this program are expedited, Streamline(K) repairs are restricted to those repair categories such as: roof replacement, heating system replacement, exterior painting, and other such repairs which do not require professional assistance to evaluate the need, feasibility or quality of work.
In addition, since FHA encourages borrowers to obtain a home inspection, the Streamline(K) will permit borrowers whose inspectors identify property conditions in need of repair to obtain financing to undertake the work needed.
Borrowers may contact any participating FHA lender for a loan application and additional information on the Streamline(K) can be found on the HUD website.
HUD is the nation's housing agency committed to increasing homeownership, particularly among minorities; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities, and people living with AIDS. The Department also promotes economic and community development as well as enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet and espanol.hud.gov.