Understanding Streamline 203(k) Loans

Program Highlights

• FHA Renovation Program

• Simplified process!

• Up to $35,000 in repairs with no minimum!

• No consultant required

• Two draws per contractor

• Contractor can receive up to 50% of total costs up front to defray cost of materials

Eligible Properties

• 1-4 unit owner occupied properties

• Town houses

• Condos (interior only)

• Row homes

• HUD Repos

Common Improvements

• New free standing appliances

• Interior and exterior painting

• Flooring, carpeting and tile

• Energy efficient improvements

• Other improvements that are a permanent part of the real estate

Other Eligible Improvements

• Changes to eliminate obsolescence and reduce maintenance

• Modernize plumbing, heating, AC and electrical systems

• Install or repair well or septic system

• Roofing, gutters, downspouts

• Lead based paint abatement

Calculating Loan Amount• Use Maximum Mortgage Worksheet (Purchase)

– Purchase price

– Cost of repairs

– Contingency Fund (optional)

– Inspection fees and title updates

– Permit Fees

– Supplemental Origination Fee (1.5%)

• Compare to 110% of after-improved value and use the lesser of the two calculations

• Multiplied by the LTV Factor

Calculating Loan Amount

• Use the Max Mortgage Worksheet (Refi)– Existing Debt

– Total Cost of Repairs

– Closing Costs, Prepaids and Discount Points

– Less FHA MIP Refund

• Compare to lesser of 110% of after-improved value or “As-is” Value + Renovation

• Multiplied by the LTV Factor

Who Can Do the Work?

• Borrower can select their own contractor

– Should be licensed and insured if required by municipality

– Should be able to document qualifications

• Borrower can do their own work only if they can document their qualifications

Getting them Closed

• Borrower collects contractor bids

• Bids are used to order appraisal

• Appraiser will do subject-to appraisal

• Borrower and contractor sign contract

What Happens After Closing?

• Customer receives a “welcome” package from M & T Bank – Mortgage Division

• Work begins

• Up to 50% can be paid to each contractor up front

• Title update will be needed

• Final inspection will be done to ensure workmanlike completion of work

Selling the Streamline K

• Much faster process to get to closing

• Include appliances and cosmetics

• Up to 110% of after-improved value

• Overcome borrower concerns about property

Get the message out to those who can build yourbusiness with you.

• Realtors

• General Contractors

• Dealers

• Community Groups

Questions?

Please Contact

Your Account Executive

Or

Broker Service Representative

at 1-800-378-7212

Thank you for your business.