Bridget's Blog



Do you want to buy a  "Handyman Special"?  Have one to sell?  Most of them are priced below "Fair market value", and sellers either don't want to do the work or can't do the work to get them "market ready".  Home that are selling quickly in my area are homes that are priced right and show like a model, or those that offer what the buyer perceives as a "great deal".

Picture this:  Grandma has just moved in with one of her kids.  She has lived in her home for 60 years and had no need or no desire to paint and the carpet is the lovely orange shag she bought in the 70's.  If it ain't broke....  Well now, the kids have to sell the home and live out of town, or don't have time, skills or desire to do the work.  They want to sell fast but don't want to give the house away.  Who is going to buy that house?  Can't you just get a loan for the value of the property (sales price)?

and this....The buyer only has saved enough for a downpayment, but hates the color of the walls and the carpet.  Will they pass this great house by that just needs some minor cosmetic improvements?  What if it needs up to $35,000 in repairs?  Bye-bye dream home....bye bye. 

But wait, hold on, haven't you heard about a great loan program that offers buyers a chance to get a loan for the "As is" price PLUS from $5,000-$35,000 in repairs/updates/improvements?  It's a 203KS FHA loan.  This government backed fixed or adjustable rate (not too many adjustable rate options that make much sense right now) 30 year mortgage, can include the cost of repairs, as long as they are not structural. 

From Mortgagee letter  2005-50:

What improvements are eligible under the new Streamlined (k) program?

 The Streamlined (k) program is intended to facilitate uncomplicated rehabilitation and/or improvements to a home for which plans, consultants, engineers and/or architects are not required.  The Streamlined (k) program includes the discretionary improvements and/or repairs shown below:


•·         Repair/Replacement of roofs, gutters and downspouts

•·         Repair/Replacement/upgrade of existing HVAC systems

•·         Repair/Replacement/upgrade of plumbing and electrical systems

•·         Repair/Replacement of flooring 

•·         Minor remodeling, such as kitchens, which does not involve structural repairs

•·         Painting, both exterior and interior

•·         Weatherization, including storm windows and doors, insulation, weather stripping, etc.

•·         Purchase and installation of appliances, including free-standing ranges, refrigerators, washers/dryers, dishwashers and microwave ovens

•·         Accessibility improvements for persons with disabilities

•·         Lead-based paint stabilization or abatement of lead-based paint hazards 

•·         Repair/replace/add exterior decks, patios, porches

•·         Basement finishing and remodeling, which does not involve structural repairs

•·         Basement waterproofing

•·         Window and door replacements and exterior wall re-siding

•·         Septic system and/or well repair or replacement


Warm Regards,

Bridget McGee  Maryland Mortgage Mama  NMLS# 196068  SWBC Mortgage.   410-960-2061 EHO or


If you are considering purchasing a home in Maryland and want to be sure you are mortgage ready, my brother Tony and I will be happy to help! We help to make the mortgage process a pleasure! 

If you already own your home, we are happy to provide a no-cost mortgage review to help you to determine if refinancing may be in your best interest.  Please contact me at 410-960-2061.

Comment balloon 6 commentsBridget "Mortgage Mama" McGee • October 13 2008 11:06PM


The 203(K) streamline is a great product. It's especially great for the homes you describe.  The one downside is that the cost of the renovation is rolled into the mortgage and if a buyer is having a hard time with cash for a down payment and closing costs, etc. they'll probably be hard pressed to qualify for the higher mortgage payment in a 203(K).  After all adding $5,000, $10,000 or more to the mortgage increases the monthly payment.

But that's really the only downside I can see.  Otherwise it is an absolutely fantabulous product.

Posted by Ken Montville, The MD Suburbs of DC (RE/MAX United Real Estate) over 11 years ago

For the life of me I'll never understand why more buyers don't go for the 203k. My guess is they don't have the vision to see the as-is property as a finished product and instead prefer the "cream puff" with all of the fancy decorating.

There is so much as-is inventory right now that a buyer can buy a foreclosure as-is, customize the house the way they want it and still be tens of thousands of dollars below market value. Unfortunately many of the "good deal" as-is properties sell to investors because of lack of homeowner interest. What do they say about horses and leading them to water?

Robert Kaetzel

Posted by None None over 11 years ago

Ken, In today's market, the seller will often pay most of the closing costs, and if the mortgage professional helps them to structure the loan they can really do well.  If you take into account that even at 7%, we are only talking $7/1000 borrowered, which is a lot cheaper than putting materials on a credit card and hoping you eventually re-do the kitchen that was the "first thing to be changed once we move in!". 

By the way...I love the word fantabulous!

Posted by Anonymous over 11 years ago

Robert, I agree that most people want to see the "model home".  Many people don't have the eye to see the potential, which is why Realtors are going to need to have "eye" to help create the picture for the potential borrower who is now buying what they can affford, and no longer shopping above their means!

I also think more people don't use it because they haven't had to.  With interest rates where they were and easy underwriting, borrower's were qualifying for 100% financing, allowing them to use any money they had saved for home improvements, no need to borrow the money.  Obviously the market is changing, these great products are now going to really start coming back into vogue.


Posted by Anonymous over 11 years ago

I have not heard of this kind of loan before.  I am definitely adding info about it to my listings.  Thanks

Posted by Regina Lundeen (Delaware Association of REALTORS®) over 11 years ago

Regina, If you have a mortgage broker that you work with, ask them to come in to do a FHA/203KS seminar.  If they can't let me know, I will get in touch with someone in your area to do that for you.
Let me know if I can help!

I love your area.  I grew up going to Ocean City, MD, Lewes and Rehobeth.  I now have friends that have property in Bethany, we always head to Rehobeth!

Posted by Anonymous over 11 years ago