Getting Started

Q: What is the maximum amount for a FHA loan?

A: The amount varies by county and state. Please refer to the US Housing and Urban Development website to dertmine FHA Mortgage Limits for your particular county.

Q: What is the Prepared Buyer Program?

A: The Prepared Buyer Program is designed to help potential homebuyers become homeowners in 6-9 months. It is a free, buyer-driven plan that helps buyers take tangible steps toward achieving their goal of homeownership. It is not a credit fix or credit counseling. Buyers must meet certain eligibility criteria, including a minimum credit score of 570.

Q: How long do I need to wait to buy a home if I have filed bankruptcy?

A: The minimum time frame is 2 years, to be considered for FHA or VA financing. Conventional loan requirements look for a longer time frame, usually 4 years or more. The best advice is to speak with an Allen Tate Mortgage Consultant about your personal situation, as the circumstances, time since filing and credit history since then all impact what financing options are available to you.

Q: Who is eligible for a FHA 203(k) Streamline Loan?

A: The FHA 203(k) Streamline Loan is available to qualified borrowers who wish to purchase a home in need of repairs, or to refinance an existing home for the purpose of non-structural remodeling or rehabilitation.

A minimum credit score of 640 is required, regardless of automated underwriting decision.

Q: How much may be financed for rehabilitation?

A: The 203(k) program allows a borrower to finance up to a maximum of $35,000 for a streamline renovation loan to make improvements (in addition to the cost of the mortgage). A full 203(k) renovation loan is only limited by the FHA county loan limits.

Q: What types of repairs may be made?

A: The FHA 203(k) Streamline Loan is intended for uncomplicated, non-structural rehabilitation or remodeling, where plans, consultants, engineers or architects are not required.

Such improvements may include (but are not limited to):

Roofs, gutter and downspouts; HVAC systems; interior and external painting; weatherization; purchase and installation of appliances; improvements for accessibility for persons with disabilities; decks, porches and patios; basement finishing, remodeling and waterproofing; doors, windows and exterior siding.

Q: May a 203(k) loan be used for multi-family dwellings?

A: The FHA 203(k) Streamline Loan may be used on 1-4 unit properties.

Q: May the 203(k) loan be used for vacation or investment properties?

A: The FHA 203(k) is only available for owner-occupied primary residences.

Q: Is a down payment required for a 203(k) loan?

A: A minimum down payment of 3.5 percent is required for purchase transactions. Refinances may not require a down payment if the borrower has substantial equity in the home.

Q: How are renovation contractors paid?

A: Rehabilitation funds are placed in an escrow account at the time of closing. Contractors are paid over a six-month period as repairs/remodels are completed.

Q: What if the estimated cost of rehabilitation exceeds the actual costs?

A: Typically a contingency reserve will be built into the renovation fund to account for cost overruns. If there are unused contingency funds after all contractors have been paid, the lender must apply these funds to pre-pay the mortgage principal.

Q: How long do I have to complete the rehabilitation?

A: The rehabilitation must begin within 30 days of closing and be fully completed within a maximum of six months.

Q: Can any Allen Tate Mortgage Consultant help me with a 203(k) Streamline Loan?

A: Allen Tate Mortgage Consultants have been specially trained to assist buyers who may be interested in learning more about this type of loan. After an initial review, these Mortgage Consultants will introduce the buyer to a Renovation Loan Specialist, who will then become their point of contact moving forward.

Q: What is a FICO score?

A: A FICO score is a credit score computed using proprietary formulas of the FICO Corporation. It predicts the likelihood of becoming at least 90 days delinquent on any credit obligation within the next two years. Most lenders will use the FICO score but many will also include additional criteria (application data) in their credit decision.

Q: How is a FICO score computed?

A: The FICO score is computed from a proprietary formula based on five different categories of information: 

   - Payment history – 35 percent
   - Amounts owned – 30 percent
   - Length of credit history – 15 percent 
   - New credit – 10 percent 
   - Types of credit in use (“healthy mix”) – 10 percent

Q: Why are there three different FICO scores?

A: FICO adjusts its FICO score formula for each of three national credit reporting agencies – Experian, Equifax and TransUnion – to take advantage of their unique data strengths. In addition, not all credit information is reported to all three credit bureaus, and there can be errors in a person’s credit record, such as information on accounts of other people due to similar names, addresses or Social Security numbers.

Q: What types of programs do you offer for first-time home buyers?

A: There are numerous programs available for first-time buyers. They vary depending on the amount of funds you have available for a down payment, your income level and your credit score. The best way to determine the best options for your particular situation is to meet with an Allen Tate Mortgage Consultant.