Federal Housing Administration Offers "Streamlined" Road to Repair

By Adam Eisman, GREENandSAVE
Posted on Sunday 29th March 2009

The Federal Housing Administration has recently expanded on its previous loan program, known as the Section 203(k) rehabilitation loan program. The new "Streamlined (k)" Limited Repair Program seeks to broaden the scope of the loans by making them available to more people, as well as opening the loans up to new products and energy efficient technologies. As their official Mortgage Letter states, the changes made were to reflect "the desires of many homebuyers and existing homeowners to improve their homes including making them more efficient."

Streamlined (k) is different from the Section 203 (k) program in that it offers additional eligible work items (including lead-based paint stabilization), an increased maximum mortgage amount for repair or rehabilitation costs from $15,000 to $35,000, and finally, the Streamlined (k) program eliminates the minimum repair cost threshold. To qualify for the Streamlined (k) program, borrowers must meet traditional FHA mortgage guidelines, which means they must have 2 years of employment history in the same line of work, a credit score that surpasses 620, and good payment history for 12 to 24 months.

Streamlined (k) is available to augment an FHA Energy Efficient Mortgage, and can be used in conjunction with other Departmental programs and activities. It can also be used to insure the mortgage on a single family housing unit sold from the Housing and Urban Development's "Real Estate Owned" inventory, as well as to insure a mortgage that covers both repairs costs and the refinance of an existing mortgage.

The Streamlined (k) program is intended to allow homeowners and homebuyers to rehabilitate or improve a home for which plans, consultants, engineers, and/or architects are not necessary. The program stresses that the improvements must be "uncomplicated", however the following is a list of things you may use the Streamlined (k) program to do:

  • Repair/Replacement of roofs, gutters and downspouts
  • Repair/Replacement/upgrade of existing HVAC systems
  • Repair/Replacement/upgrade of plumbing and electrical systems
  • Repair/Replacement of flooring
  • Minor remodeling, such as kitchens, which does not involve structural repairs
  • Painting, both exterior and interior
  • Weatherization, including storm windows and doors, insulation, weather stripping, etc.
  • Purchase and installation of appliances, including free-standing ranges, refrigerators, washers/dryers, dishwashers and microwave ovens
  • Accessibility improvements for persons with disabilities
  • Lead-based paint stabilization or abatement of lead-based paint hazards
  • Repair/replace/add exterior decks, patios, porches
  • Basement finishing and remodeling, which does not involve structural repairs
  • Basement waterproofing
  • Window and door replacements and exterior wall re-siding
  • Septic system and/or well repair or replacement

While there is no minimum cost of an improvement to be eligible, there is a ceiling of $35,000. If projects exceed $15,000, the mortgage must perform or obtain an inspection to determine that all listed repairs were completed.

There is still a long list of "Do Nots" when it comes to the Streamlined (k) program. The homeowner may NOT make a major rehabilitation or remodeling, such as the relocation of a lode bearing wall; construct an add-on room; repair structural damage; landscaping or similar site amenity improvements; any repair that requires a work schedule over 6 months; or activities that require more than two payments per specialized contractor.

There is a lot of information on this program that has been omitted for reasons of the complexity of the options allowed. For instance, the Streamlined (k) program can be used in conjunction with the Energy Efficient Mortgage program, but the waters are murky there and its best to check this out for yourself and get the exact information from the institution that it is being offered by.

If you have any question regarding this program, please feel free to contact the Federal Housing Administration in Philadelphia at (800) 440-8647. For other sources on this program, including the official website, take a look at these links: Housing and Urban Development's Official Outline, and the Real Estate Blog.

GREENandSAVE.com is a free resource for anyone that wants to save energy, money, and the environment. The articles, product reviews, online tools, and return on investment calculations are researched from a diverse range of public and private sector sources. Overall, the company is passionate about saving money as well as creating healthy homes, offices, and lifestyles.

For more information on some State money that is available for homeowners, take a look at the GREENandSAVE article on The Keystone "HELP" Program. You could also check out the Return on Investment Table to see how to most efficiently spend money on upcoming Green Home Remodeling Projects.

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