The FHA 203K Rehab loan program is a great loan for Orange County First Time Buyers. Currently there is a very tight supply of homes available in southern California, especially in the $250,000 to $500,000 price, which is a sweet spot for Orange County First Time Buyers. It has been frustrating for these new buyers to get an offer accepted. After going through the FHA Loan PreApproval process, they were ready to make an offer and close escrow 30 days later. So they thought. It's tough to compete against two or three other offers, let alone 20 or 30, especially when some of those offers are "all cash." New home buyers should keep their options open.
FHA 203K Streamline Program is the Solution
What does it take to separate from the crowd? How about a program that will allow even a buyer with only 3.5% down payment to purchase a home in need of repair. These homes will scare away most home buyers who either do not have the vision or do not want to take the time or deal with the expense in fixing up a home. The FHA 203K Streamline program will allow a home buyer to include up to $35,000 in improvement costs into the FHA purchase loan. One loan is used for the purchase and the cost to rehab the home. While this program is available to all FHA approved lenders, not all lenders want to deal with the extra work that goes into this loan program. But there are local lenders who do have experience closing Orange County FHA 203K Streamlines.
The buyer does not need to be a First Time buyer and there are no income limits. The property can be a single family home, or have as many as 4 units. The buyer does need move into the property since this loan is not available to investors.
FHA 203K Streamline is Available for Orange County FHA Approved Condo's
The condo must be within an FHA approved project. To check whether a condo is FHA approved, go to the HUD website. Rehab of a condo is limited to the interior of the unit. Also, only 25% of the total units can be undergoing rehab at any one time. The maximum mortgage amount amount cannot be more than 100% of the after approved value. (FHA allows 110% of value on non-condo loans.)
It will take a little longer to close a 203K loan. Once the escrow begins, it will take approximately 60 days to close escrow, provided the buyer moves quickly and works with a contractor who is experienced with the 203K loan product. Most delays in closing with the 203K loan have to do with borrower indecision when it comes to choosing a contractor and then staying within the predetermined budget. This is why it is important to work with 203K experienced lenders and contractors.
Eligible Repairs and Improvements Typical for an Orange County Home
- Roofs, gutters and downspouts
- HVAC systems (heating, venting and air conditioning)
- Plumbing and electrical
- Minor kitchen and bath remodels
- Flooring: carpet, tile, wood, etc.
- Interior and exterior painting
- New windows and doors
- Weather stripping & insulation
- Improvements for persons with disabilities
- Energy efficient improvements
- Stabilizing or removing lead-based paint
- Decks, patios, porches
- Purchase of new kitchen appliances or washer / dryer
Repairs or Improvement not Allowed
- Landscaping or yard work
- Major remodeling
- Moving a load-bearing wall
- Room additions or add-ons to the home
- Fixing structural damage
For 2011 the FHA loan limit for Orange County is $729,750. The limit is the same for the 203K Streamline program. This means the max loan amount before adding the cost of improvements, assuming the borrower is going for the max of $35,000 in improvements, would be $694,750. With $35,000 added to the loan for improvement, the total loan amount would be at the Orange County limit of $729,750. *2013 limit is still $729,750
This is a great program for the right home buyer and the right property. The first step is to get prequalified and then PreApproved for an FHA loan. The PreApproval process for a FHA 203K loan is no different than for a normal FHA loan (FHA 203B).
Contact us for your Orange County FHA Mortgage:
Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.
949-640-3102 | tstorm (at) ochomebuyerloans.com