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FHA 203(k) Loan

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Loans

FHA 203(k) Loan

This loan lets you buy or refinance a home and roll renovation costs into one mortgage. It is built for buyers who want to fix up a property, build equity, and put down as little as 3.5%.

This loan lets you buy or refinance a home and roll renovation costs into one mortgage. It is built for buyers who want to fix up a property, build equity, and put down as little as 3.5%.

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About this loan

The FHA 203(k) loan is a government-backed mortgage that allows you to purchase or refinance a property and include renovation costs in one single loan. Instead of using separate financing or paying out of pocket for repairs, the funds are rolled into your mortgage and paid over time.


Key Benefits


  • Combine purchase (or refinance) and renovation into one loan

  • Finance repairs based on the home’s after-repair value

  • Build equity through improvements

  • Available for 1–4 unit properties

  • Minimum credit score typically 580

  • Down payment as low as 3.5%


Borrowers must occupy the property, at least for the first 12 months.


Property Eligibility


  • 1–4 unit homes

  • FHA-approved condos (interior renovations only)

  • Modular and manufactured homes

  • No pure investment flips


Two Types of 203(k) Loans


Limited 203(k)


  • Up to $75,000 in repairs

  • No structural changes

  • Ideal for cosmetic updates such as roofing, flooring, kitchens, HVAC, windows


Standard 203(k)


  • Minimum $5,000 in repairs, no strict cap

  • Allows structural work, additions, and ADUs

  • Requires a HUD consultant

  • Can finance up to 12 months of mortgage payments if property is unlivable


Basic Process


  1. Get pre-approved with a 203(k) lender

  2. Find property and submit offer

  3. Obtain licensed contractor bids

  4. Appraisal based on after-repair value

  5. Loan approval and closing

  6. Funds released in draws as work is completed

  7. Final inspection and project completion


Contractors must provide licensing, insurance, detailed scope of work, and tax documentation.

The FHA 203(k) loan is designed for buyers and house hackers who want to create value, customize a home, or turn a fixer-upper into a long-term asset using low down payment financing.

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