Streamline Repairs and
Properties, Q & A Pg 2
What are the FHA minimum and maximum amounts for repair costs under this FHA program?
Given the need for homeowners to make minor repairs without exhausting personal savings, and in
consideration of the increasing cost of materials, the FHA 203k minimum repair cost of $5,000 is eliminated and the
ceiling is now raised to $35,000. This no minimum is different than the regular FHA 203k. This
revised maximum repair/rehabilitation amount recognizes the cost of making older homes more energy efficient.
Note that as described below, when the repairs exceed $15,000, the mortgagee must perform or obtain an inspection
to determine that all listed repairs were completed.
Can this FHA program be used for repairs and improvements on purchases of HUD Homes?
Like the regular FHA Section 203(k) program, FHA Streamlined (k) may be used for single-family
housing sold by HUD. REO properties that have been designated by FHA’s Management and Marketing contractor
(M&M) as “insurable” with repair escrow ($5,000 or less in required repairs) or “uninsurable” (with more than
$5,000 but no more than $35,000 in required repairs) are eligible for the FHA Streamlined (k) program provided that
the repairs qualify as eligible work items outlined under eligible improvements above.
What if the REO property requires lead-based paint stabilization?
The FHA Streamlined (k) program may be used for the financing of REO purchases where a pre-1978
property has been determined to contain lead-based paint and the M&M Contractor has completed a stabilization
plan and cost estimate to stabilize (mitigate) the deteriorated paint. The purchaser must sign a 203(k)
rehabilitation financing lead agreement requiring that a clearance examination and report be included in the work
write-up and conducted before release of the final construction disbursement and before occupancy. The credit
from HUD, received at sales closing by the purchaser, associated with the lead-based paint stabilization plan is
not included in the $35,000 Streamlined (k) limit. The FHA Streamlined (k) program may be used for all
eligible repair items as shown above, including the cost of lead-based paint stabilization not paid for by HUD when
it sells a property requiring lead-based paint stabilization. A state- or Environmental Protection Agency (EPA)
certified lead-based paint inspector, certified risk assessor or sampling technician, must perform the clearance
When the HUD sells a single-family REO property, the M&M Contractor determines whether repairs
are necessary to stabilize any lead-based paint. HUD’s regulations for pre-1978 housing require the
stabilization of paint except for paint determined not to be lead-based paint. HUD may reduce the sales price
by the amount of a credit equal to the its contribution toward the cost of lead-based paint stabilization.
Any lead-based paint stabilization costs in excess of this credit become the responsibility of the purchaser.