Thinking About Buying a Bank Owned Property? The FHA 203(k) Streamline Program Is A Great Loan Program.

In Arizona, there are currently more than “just a few” houses for sale that are owned by the banks or are listed as a short-sale. If you are in the market to buy a home and have seen any of these properties, you know that many of them need a little TLC before they could become your dream home – and FHA has a loan program designed for properties who need a little work done. The loan program is called the FHA 203k streamline program.

FHA 203k Streamline Program

The FHA 203k streamline loan is designed to allow people who want to purchase a home in need of a few repairs to buy the home using a base loan and  then have money for planned repairs or improvements escrowed and paid directly to the contractors.

For the FHA 203k streamline program, you can have up to $35,000 set aside for repairs and while there are a few “extra” steps to the loan, it is not significantly more difficult to qualify for and get approved for a regular FHA loan.

Top FHA 203k Streamline Repairs

Some of the top repairs/improvements that people use the 203k streamline program for include:

• Remodeled kitchen
• Remodeled bathroom
• Fixing termite damage
• New exterior work (stucco)
• Replacement of plumbing fixtures
• New flooring
• New roofing
• Installation of new smoke detectors
• Major landscape improvements

When the loan is funded, 50% of the rehab funds can be disbursed immediately. Usually included with the first disbursement is an instruction letter with details regarding the 2nd and final disbursement. The final disbursement can be  issued only when all of the work is completed. If the work that has been done is $15,000 or more then a final inspection by an FHA appraiser is required. If the work is less than $15,000, then no final inspection is required.

If the home that you are looking at just needs a few, relatively minor improvements – the FHA 203k streamline is a great option. If the home that you are considering needs major repair work – there is also an FHA 203k loan (not the streamline version) that will allow you to reserve more than $35,000, but requires more project planning and approvals and is a little more work in getting it approved.

Chandler Arizona Mortgage Rates for January 26, 2009