What is FHA 203k Streamline?

By Sari R. Updated on 6/20/2017

Looking to renovate or remodel your home? The FHA Streamline 203k may be just what you are looking for! This loan is a fast and easy way to acquire the essential funding you need. 

The FHA 203K Streamline program lets you add the remodeling funds with your original mortgage balance. You can use this loan to make simple repairs that don't require an architect or licensed engineer's involvement or plans. However, if you're considering a larger construction project, then you'll want to look at a standard FHA 203k loan.

The FHA eliminates the requirement to immediately apply for a home equity loan to fund home repairs. Instead, the home mortgage and remodeling funds are managed under a single, convenient loan. 

In addition, the FHA Streamline 203k program can be used to purchase or refinance a single family home, provided it is used as a primary residence. 

For FHA 203k loans, borrowers have the option of getting a fixed or adjustable rate on their loan.

Eligible Repairs for a 203k Loan

Here's an example of the repairs that can be made using FHA 203k Streamline funds:

• Painting, both exterior and interior
• Replacement of windows/doors
• Upgrades to plumbing and electrical systems
• Add or repair gutters and downspouts
• Replace or repair flooring
• Purchase new kitchen appliances
• Roof repair or replacement
• HVAC system upgrade/replacement
• Energy conservation improvements such as insulation and weather stripping
• Improvements to accommodate residents with handicaps or disabilities
• Non-structural remodeling

Ineligible Repairs

• Major remodeling, such as the relocation of a load-bearing wall
• New construction such as room additions, deck or patio construction
• Structural repairs
• Repairs requiring architect or engineer drawings or exhibits
• Landscaping or amenity improvement
• Any project requiring a work schedule greater than six months
• Remodeling assignments involving more than two payments per specialized contractor
• Projects that make the house uninhabitable during the time of renovation

Eligible Property Types

FHA 203k loans cover single family homes, buildings with one to four units, and larger buildings to be converted to have four or fewer units. 

Condominium units may be eligible but only for interior repairs and improvements. 

For buildings divided into residential sections and commercials sections, FHA 203k loans can only be used for the residential segment of the building.

FHA Standard 203k

The standard incarnation of the program has several key differences from the streamline variant. Unlike the Streamline version, which only allows funding up to $35,000, the standard FHA 203k has no limit other than FHA loan limits and individually set limits imposed by each lender. 

In addition, standard FHA 203k loans apply to more substantial home renovations, including room additions, property landscaping, construction of a deck, patio, or terrace, installation of steel-insulated exterior doors, and rehabilitation or improvement of a detached garage.

The standard version of the 203k loan has its own set of benefits as well. For instance, six months’ worth of payments may be financed into the loan, saving borrowers a great deal in the upfront costs of securing a loan.

 Lastly, when acquiring a loan, the standard FHA 203k allows seller contributions of up to 6%.