FHA Helps Fixers

FHA Program Gives Fixer-Uppers a Boost(January 30, 2006) --

FHA is allowing buyers to roll the costs of minor repairs on a property into their mortgage. The "limited repair" loan, known as Streamlined K, is a version of the agency's 203(k) renovation loan program. Its goal is to get properties with relatively minor problems into the hands of credit-worthy buyers.

Streamlined K is part of the U.S. Department of Housing and Urban Development's effort to make FHA relevant after finding its marketshare crimped by private lenders reaching out to borrowers who years before would've had trouble getting loans at a rate that made sense.

The Streamlined K program is designed to overcome the reluctance of many real estate professionals to accept contracts that called for FHA-insured loans because appraisers were requiring sellers to make what they considered to be nit-picking repairs or major fixes they didn't want to make.

A maximum of $35,000 in repair costs can be rolled into the mortgage, up to 110 percent of the appraised value of the property. Repair items eligible under the program are:

Repair or replacing roofs, gutters, downspouts, heating and air conditioning systems, plumbing and electrical systems, windows and doors, flooring, septic systems, wells, decks, patios, and porches.

Minor remodeling that does not involve structural repairs.

Exterior and interior painting.

Weatherization, including storm windows and doors, insulation and weather-stripping.

New appliances, including microwave ovens, washing machines, and clothes dryers.

Accessibility improvements for handicapped people.

Lead-based paint stabilization or abatement.

Basement remodeling or finishing that does not involve structural changes.

Re-siding.

Basement waterproofing.

Source: Lew Sichelman, United Feature Syndicate (01/30/06)