FHA 203K Renovation

FHA 203K Renovation

The FHA 203k is offered by the Federal Housing Administration, which enables homebuyers to buy and fix-up a property with as little as a 3.5% down payment. Rather than buying a home and then using their own cash for improvements, homebuyers can finance repairs and improvements into the mortgage loan.

When considering using this incredible renovation loan, it’s important to know there are two versions: the “streamlined” version, and the “full” version. Which version you will need depends on the total dollar amount you need for improvements and repairs, and the type of repairs and upgrades you will be doing.

FHA 203k Benefits:

  • Buy a decent home, and turn it into the right home for you and your family.
  • Finance the improvements, instead of using your own savings.
  • Increase the value of the home, with the potential of reselling the home for much more.
  • Interest rates and payments are often lower than rates of conventional loans.
  • Flexible qualification criteria compared to some other loan types.

Top Considerations when using the FHA 203K:

  1. Think as an investor for future resale. Having a grandiose house in a depressed neighborhood can pose challenges if you resell your home in the future.
  2. Know which version is right for you: Streamlined vs. Full. The streamlined version (outlined in the table below) has limitations on the type of improvements that can be done, and the dollar amount of work to be done. The full version enables you to complete more complex projects with a much higher amount of work to be financed.
  3. This is a complex loan in comparison with regular FHA loans, or Conventional loan programs. Choose an experienced mortgage lender and loan officer who regularly closes these loans. Working with experienced professionals ensures that you:
    • Get pre-approved accurately up front, so there are no surprises later in the process.
    • Have a smooth process with minimal stress.
    • Prevent needless delays that can waste your time and money.
    • Close by your contract date.

Possible Improvements and Repairs*

  • Kitchen Remodeling
  • Flooring, exterior and interior painting.
  • Roofs, gutters and downspouts.
  • Heating & air conditioning systems.
  • Replacement of window and doors and exterior wall re-siding.
  • Appliances: refrigerators, washers and dryers, dishwashers and microwaves.
  • Replacement/addition of exterior decks, patios, & porches.
  • Structural repairs.
  • Additions.
  • Electrical updates.
  • Convert 1-unit dwelling into multi-unit, or vice versa.


*The total purchase price of the home plus repairs cannot exceed FHA loan limit for the county in which the home is purchased.

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