A Streamline 203K is NOT a 203K
Although there are some similarities, I cannot stress enough how different a Streamline 203Kis from a Full 203K in some important aspects.
I realize that a lot of the people out there offering “Training” on these products do not really understand the difference between them. I often see people talk about the “203K” and then go on to describe a “Streamline”203K (although I haven’t seen that explained accurately yet either). The bigger issue though, is when they state that things like Solar(PV) can be done under the Streamline203K when this is only allowed under the Full 203K (that is not to say that an uninformed Underwriter has never allowed this to occur with a Streamline 203K, but I would not count on that).
Another reason that Loan Officers sometimes refer to a Streamline 203K as a 203K is that very few Loan Officers are able to offer a Full 203K. Although many Loan Officers now have access to the Streamline 203K, the Full 203K is much more restricted. Typically the Lenders will only allow those of us with significant experience in this area to offer the Full 203K.However, for most applications the Streamline 203K will be more than sufficient if properly understood.
Here are some important distinctions.
The Streamline 203K allows$35,000 to be added to the Sales Price or Value before calculating the required down payment resulting in a maximum of $33,775 financed and an increase in required Down Payment of $1,225. I realize that this is commonly misrepresented as $35,000 in actual construction that can be added.The amount of upgrade and repairs will typically be limited to approximately $28,000 to $31,500 (please refer to the Streamline 203K Program Explanation page to understand the realities of this).
Remember that this information is not intended as a strict interpretation of the guidelines. This is intended as a practical guide, from someone who has spent almost 20 years specializing in these types of programs, telling you how they actually work in the real world.
Streamline 203K Full 203K
| The Streamline K allows approximately $28,000 to $31,500 in upgrades and repairs to be incorporated into the purchase process. | The Full 203K does not specifically limit the amount for repairs or upgrades. It is only limited by the area FHA loan limits, the buyer’s qualifying capacity, and appraisal constraints. On a Full 203K literally hundreds of thousands are allowed in upgrades and repairs. |
| No structural repairs or upgrades requiring plans and specs are allowed | You are not restricted on this |
| Solar(PV) is not allowed. Since it is mounted to the roof it is considered to be a structural change | Solar is allowed. This can be a great option for financing Solar depending on the cost of the system in relation to the amount of value added. Please refer to the specific Financing Solar page for details |
| A Consultant is not required although the EEM Facilitator I work with has acted as a Project Manager before with a couple of the Contractors I know who have worked with the Facilitators on EEM’s and requested that she provide that service on the Streamline 203K. | A Plan Consultant approved by FHA must be used
Consultants in your area may be located through this HUD Link: |
| 50% of the bid funds may be released at close of escrow, the balance will typically be released approximately 30 days after the completion of the work(I am hearing that a few lenders are only releasing funds at the completion of all work. You may wish to check with the Lender providing the Streamline 203K) | The funds are released on a draw basis |
Sacramento 1st DBA Comstock Mortgage – Lic : 01390474
Kevin Nunn – NMLS 305826 / DRE 01158674
