FHA 203k Loans


Renovation Mortgage Programs


From House To Home

If you are buying a home that needs minor or major upgrades, an FHA 203k Loan is one of many rehabs loan programs that includes funding for home renovation costs in the original loan amount, at the time of purchase.

How Do 203k Loans Work?

Learn how to purchase or refinance your home with an FHA 203K Loan. 

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Shopping For A 203k Lender

The top questions to ask a renovation lender to make sure they are right for you.

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Getting The Best Mortgage Rate

Understand how interest rates work with the different rehab loan programs.

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The 203k Loan Advantage

FHA 203k and other rehab home loans offer a unique advantage to buyers, allowing them to focus on selecting a property based on location and affordability, while knowing that they can incorporate their desired property upgrades and amenities shortly after closing. 


These comprehensive loan programs have gained popularity among homebuyers due to their ability to consolidate the costs of property renovations into a single mortgage at the time of purchase, simplifying the financial process.


Available for a wide range of projects, from minor cosmetic enhancements to major structural renovations, FHA 203k Loans provide a versatile solution for those looking to invest in a property with potential. These loans can be utilized not only when purchasing a new home but also by current homeowners interested in refinancing their existing mortgage.


By eliminating the need for separate financing or home equity loans, FHA 203k and other rehab home loans streamline the renovation process, making it more accessible and efficient for buyers and homeowners alike. This approach encourages investment in properties that may have been overlooked due to their need for updates or repairs, ultimately contributing to neighborhood revitalization and improved property values over time.


With a focus on flexibility and convenience, FHA 203k and other rehab home loans have become an increasingly popular choice for those looking to transform their dream property into a reality, without the financial burden and complexity of managing multiple loans.

Benefits Of Rehab Loans

Renocation loan program helps preserve or increase neighborhood real estate values, as well as create employment opportunities for 203k Contractors.

  • Finance Upgrades -  Cosmetic and structural rehab work.
  • Flexible Underwriting - Standard FHA credit guidelines.
  • Get What You Want - Buy a property, turn it into a home.
  • Increased Values - Improve the re-sale value and save money.
  • Energy Efficient Upgrades - Save on utility expenses.
  • Low Down Payment - Finance up to 96.5% plus upgrads.
  • Perfect "Fixer-Upper" Loan - New paint, carpet, kitchen remodel... and the list goes on.
  • Discounted Listings - Get a better deal when buying a property that needs a little TLC.

The 203k rehabilitation mortgage program was intended to expand homeownership opportunities and affordability while revitalizing communities and neighborhoods by providing financing for properties that need renovation work to make them livable or sellable.


FHA's primary goal is to help borrowers purchase a home they may not otherwise be able to finance based on the down payment requirements of most conventional loan programs. To further that goal, FHA offers favorable loan terms, higher loan limits, and flexible down payment options to qualified buyers.

Getting Started

The following outline highlights the process of getting a renovation loan:


Step 1) Getting Pre-Qualified


Once we have an initial consultation to discuss your goals and questions, the first step is to complete a secure online loan application.


A loan application takes 10-15 minutes at your convenience, and allows the lender to pull a copy of your credit history and submit the initial application through preliminary underwriting for the purpose of matching your unique lending scenario with all available programs that you are eligible for.


At this point, your lender can discuss actual rates, fees, and program options, as well as issue a pre-qualification letter and home shopping/purchase offer instructions for your real estate agent.


Step 2) Search For A Property


It is beneficial to have your lender and real estate agent communicate ahead of time to ensure there are no misunderstandings about how to prepare purchase offers, what price range to search in, and the types of eligible properties and improvements that are available for your specific type of renovation loan.


Step 3) Submitting A Purchase Offer


It is helpful if you and your agent can meet with a contractor to discuss renovation costs for a specific property before an offer has been submitted to the sellers.


Having an idea of the necessary and wish list upgrades will give your agent a better idea of how to negotiate the purchase price.


Step 4) Work Write-Up, Inspections, Appraisal


This is where the home-buyer, contractor and consultant meet, inspections are ordered and final costs are figured into a Work Write-Up and an appraiser is sent to the property to determine as-is and after-repair values.


Your lender will be involved in this process guiding you every step of the way.


Step 5) Final Underwriting


All of the property related reports and inspections are submitted to the bank along with any final borrower documentation for final underwriter review.


If there are questions about the property or appraisal, there may be a little back and forth between the lender, consultant, or contractor.


6) Loan Funding

This is where the final closing documents are signed by the buyer and the seller receives their check from the bank for the purchase price.

At this point, an escrow account is established for renovation costs.

Popular Rehab Loan Programs

  FHA Loans, VA, USDA & Conventional Options

home improvement or better rates

adding rooms and knocking down walls

carpets, paint and other cosmetic upgrades

Fannie Mae HomeStyle® program

go green and save money with an EEM Mortgage

foreclosures and property preservation

Rehab Loan Frequently Asked Questions

You can also call us directly at (833) 600-0036 to speak with a licensed renovation lender.

  • How do I get approved for a rehab loan ?

    Most of the popular rehab mortgage loan programs follow a basic pre-qualification process similar to traditional home loans to determine a borrower's eligibility, which is typically based on common factors including credit, income, employment, and down payment.


    The primary benefit of renovation mortgage programs, such as the FHA 203k loan, is that it allows a buyer to borrow the money to purchase the home and also finance any repairs that are needed and/or desired.


    Since the number of available renovation funds differs between the available rehab loan program according to appraised value, loan amount, and the type of upgrades that are planned, the first step in getting pre-qualified for a renovation loan is to talk with a few licensed FHA 203k Lenders and ask them about their experience with rehab loans.


    Once you find a renovation lender that you can trust and feel confident with, your next step will be to complete a formal secure application which will give that lender permission to pull a copy of your credit history and match your lending scenario with a rehab loan program that best fits your downpayment and monthly budget goals.

  • Do I need a real estate agent to buy a rehab property?

    The main advantage in working with a local real estate agent who has experience with renovation properties is that their market insight should improve your ability to negotiate the right purchase price based on neighborhood listing trends and property conditions.

    Having a seasoned REALTOR on your side to communicate with the seller or listing agent is a good way of limiting your exposure to hidden risks or speedbumps that might delay or kill a purchase transation.

  • Why is it hard to find a lender that does 203k loans?

    FHA 203k Lenders specialize in renovation loans and work with mortgage companies that have an FHA 203k program with trained underwriters, funders, and contractor managers.


    While the renovation lending process from the homeowner's vantage point is relatively as painless as any other mortgage purchase or refinance program, the higher levels of attention to detail, program knowledge, government compliance, and customer communication that a renovation lender has to perform at are significantly more intense than most loan originators are used to.


    Bottom Line - mortgage professionals who specialize in FHA 203k or other related rehab loan programs are driven by their passion for helping buyers turn houses into homes, as well as the good they are doing for the local economy and community.

  • What is an FHA 203k Loan?

    An FHA 203{k} Loan is a home loan program that allows homeowners to get just one mortgage loan, at a long-term fixed (or adjustable) rate, to finance both the acquisition and the rehabilitation of the property. To provide funds for rehabilitation, the mortgage amount is based on the projected value of the property.


    "Section 203k (k)" is the technical term for the FHA loan, which is referring to a revision to the National Housing Act (NHB) that was made to enable HUD to promote and facilitate the restoration of the Nation's existing housing stock.


    A 203k Mortgage is funded by a licensed HUD-approved lender and the mortgage is insured by the Department of Housing and Urban Development


    Section 203(k) fills a unique and important need for homebuyers. When buying a house that needs repair or modernization, homebuyers usually have to follow a complicated and costly process. The interim acquisition and improvement loans often have relatively high-interest rates, short repayment terms, and a balloon payment. However, Section 203(k) offers a solution that helps both borrowers and lenders, insuring a single, long-term, fixed, or adjustable rate loan that covers both the acquisition and rehabilitation of a property. Section 203(k) insured loans save borrowers time and money. They also protect the lender by allowing them to have the loan insured even before the condition and value of the property may offer adequate security.

  • What's the difference between a 203k Streamlined and Full 203K?

    The FHA Streamlined (Cosmetic)

    Referred to as the Limited(k), Streamlined K, Streamline, or "Small k" 203k loan, the Streamlined 203k loan is the most popular and common of rehab loan programs due to its flexible underwriting criteria that follow the same liberal guidelines as traditional FHA loans and limited contractor and consultant processes.


    HUD has developed an FHA-insured mortgage, called the “Streamline (K)” Limited Repair Program that permits homebuyers to finance an additional $35,000 into their mortgage to improve or upgrade their home before move-in. With this product, homebuyers can quickly and easily tap into cash to pay for property repairs or improvements, such as those identified by a home inspector or FHA appraiser.


    The Streamlined 203k loan program is intended for homes that don’t need extensive repairs (structural, landscaping, etc.). The streamlined allows homebuyers to finance the purchase or refinancing of a home and improvements and upgrades of up to $35,000. Unlike the Full 203k, there is no minimum total repair amount and homebuyers don’t need to work with a HUD consultant.


    203k Streamlined Eligible Improvements

    • 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 Renovations that do not involve structural repairs (Kitchen/bath remodeling)
    • Painting of interior and/or exterior
    • Weatherization, including insulation, storm windows, etc.
    • Purchase and installation of appliances
    • Septic system and/or well repair or replacement
    • Accessibility improvements for persons with disabilities
    • Lead-based paint stabilization of abatement of lead-based paint hazards
    • Repair/Replacement/Addition of exterior decking, patios, or porches
    • Basement finishing and renovation so long as it does not involve structural repairs
    • Basement waterproofing
    • Window and door replacements and exterior wall re-siding

    203k Streamlined Ineligible Improvements

    • Renovation including structural changes, like moving a load-bearing wall, new construction or addition of rooms
    • Landscaping or Fencing
    • Luxury items like swimming pools, hot tubs, tennis courts, etc.
    • Work that will not start within 30 days of loan closing or will cause the borrower to be displaced from the home for more than 30 days or renovations that will take longer than 6 months to complete

    Full 203K (Structural)

    The Full 203K loan is used for homes that need major rehabilitation, or when repairs are structural in nature, involve landscaping, or if the total renovation costs exceed the $35,000 limit of the 203 k streamline loan.


    You will need to work with and get approval from a HUD consultant for all planned repairs with a Full 203k loan. The standard loan also has a minimum requirement of $5,000 of repairs. Upper FHA loan limits vary based on property type and location so you’ll need to check with a mortgage planner when considering properties. With a Full 203k loan you can add up to 6 months of mortgage payments into the total loan amount if the HUD consultant determines you will need to be displaced from your home during repairs.


    Eligible Improvements for the Full 203K:


    • All repairs listed above as being eligible for the streamlined loan
    • Structural alterations and reconstruction such as room additions, repair of termite damage, major remodeling of kitchens and bathrooms, finishing an attic or basement, adding a second story to a home, etc.
    • Major landscaping and site improvement including grading, tree removal, repair of sidewalks and driveways if they are a safety hazard to the property.
    • Work that may cause the homeowner to be displaced for longer than 30 days (subject to HUD consultant approval)
  • How fast does the bank require construction to be completed?

    For an FHA 203k Loan, the borrower signs a Rehabilitation Loan Agreement that lists three provisions concerning the timeliness of the work:


    • The work must begin within 30 days of execution of the Agreement.
    • The work must not cease prior to completion for more than 30 consecutive days.
    • The work is to be completed within six (6) months following the execution of the Agreement; however, the lender should not allow a time period longer than that required to complete the work.

    Your lender will work closely with your contractor, consultant, and real estate agent to help eliminate as many delays as possible. If you are simply adding new paint and carpet through a 203k Streamline loan, then your renovation timeline could be a few days or weeks. Each program has its own timeline for construction to be completed, and a renovation lender will help you structure the right rehab loan scenario if you are considering moving a property, expanding from a single unit to four units, or any other major structural renovation work.


    It is important to remember that if the cost of the rehabilitation increases during the rehabilitation period, the 203(k) mortgage amount CAN NOT be increased to cover the additional expenses. This is why it is essential that you carefully select a contractor that will accurately estimate the cost of the improvements and complete the project at or below the estimate.

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