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The FHA 203(k) Streamline loan allows borrowers to purchase and renovate a home utilizing a single home loan. This enables first-time buyers who want to invest in a fixer-upper to obtain the funds necessary to renovate the property by borrowing against the value of the home after repairs.

When the borrower locates a home in need of repairs, the bank begins processing the application. The borrower then obtains contractor bids to estimate the cost of renovating the property. On appraisal, the property is issued an "As is" value as well as an "After improved" value, which is based on the "As is" value plus contractor estimates for renovations.

This unique loan makes purchasing a property in need of repairs an easy task for borrowers who don't have the cash on hand to undertake repairs on their own. This single home loan is an uncomplicated solution for borrowers who want to immediately make needed repairs without going through the process of obtaining another loan.

There is a minimum of $5,000 and a maximum of $35,000 for repairs under the FHA 203(k) Streamline loan. Because of this financing window, renovations cannot be extensive – major rehabilitation and remodeling, new construction (like adding rooms or square footage), and structural repairs are not permitted under this program.

Requirements:

The standard FHA down payment of at least 3.5% is required. Borrowers must have a minimum FICO score of 620. Manufactured homes, unfinished remodels, and conversions aren't eligible for this program. Properties must be graded "average" or higher on appraisal. Homes must be at least one year old and must be previously occupied.

The home must be livable during renovations. Luxury items (pools, spas, gazebos) and site amenities (fence, landscaping) are not permitted as part of the renovation financing.

If you're a borrower looking to invest in a fixer-upper, contact an Idaho mortgage specialist to determine your eligibility for the FHA 203(k) Streamline loan!