What is an FHA 203K Renovation Loan?

The FHA 203K renovation loan gives eligible homeowners the power to finance major upgrades to their homes while keeping the costs as low as possible. You can gain access to a large amount of funding for repair and renovation while escaping duplicate costs of taking out more than one loan.

The government-insured FHA 203k helps home loan customers who want to repair or remodel a primary residence at the time of purchase or refinance. The lender rolls the money to finance (or refinance) a home and complete repairs into a single home loan. You can get a fixed rate with only a 3.5% down payment.

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By going with a single loan, you can skip paying the extra expenses that a second loan would require. You also miss the higher interest rates associated with short-term lending. Your advantages include:

  • One loan amount
  • One interest rate
  • One payment
  • One "as-complete" value
  • One round of closing costs

Can an FHA 203 help fix my house?

To be eligible, the residence must be at least one year old and fall within local Federal Housing Authority price guidelines. The project must cost at least $5,000. The cap is set at an additional 50% of the appraised value after completed repairs, including contingencies.

The FHA 203k, in particular, appeals to homeowners and homebuyers with limited repair budgets. Older structures with aging plumbing, leaky roofs or worn-out floors can run up costs quickly. With this help, qualified owners can make inevitable, expensive changes while limiting the blow to their personal savings.

A list of standard upgrades for FHA 203k funding can be found online. Among the ways the program can help buyers like you:

  • Make structural changes and reconstruction
  • Modernize or remodel rooms
  • Repair or replace plumbing, roofing and floors
  • Improve function, appearance, landscaping, energy conservation, health, safety or disabled accessibility

Streamlined FHA 203K

The streamlined FHA 203k program handles smaller projects. It can help homeowners with improvements that cost up to $35,000. There is a maximum value that determines property eligibility.

These plans can help you make minor changes such as:

  • Fix or replace roofs, gutters, downspouts, flooring, septic system, well, exterior decks, patios, porches, windows and doors
  • Upgrade existing HVAC, plumbing and electrical systems
  • Remodel or finish basement or kitchens, without structural work
  • Paint, weatherize and waterproof
  • Purchase and install certain appliances
  • Improve disabled accessibility
  • Fight lead paint issues

Time to turn a fixer-upper into a showstopper?


Have questions? Contact your local loan officer for next steps.

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