FHA 203(k)

Have you ever wondered if you could get a loan for a fixer-upper without having an immense amount of capital? There’s another type of FHA loan out there for you. A 203(k) loan is exactly that and allows buyers to roll the costs of the renovations into their mortgages.

Therefore, buyers can purchase (or refinance) homes that require renovations, and get loans that cover both. However, it’s important to note that more luxurious renovations like a pool, for example, cannot be done with a 203(k) loan. 

If a home that you’re considering buying needs a new bathroom, laundry room, kitchen remodel, etc.; but the price of the home plus the renovations is out of reach, that’s where a 203(k) loan comes in. Because this loan is backed by the FHA, down payment requirements can be minimal and, therefore, doable. 

There are two main types of 203(k) loans—streamline (or limited) and standard. Streamline loans allow up to $35,000 for repairs and renovations as long as they are not large structural repairs.

Standard loans do allow for major structural repairs, they must be at least $5,000 dollars, and buyers must work with HUD consultants during the renovation process. With this loan, it’s also possible to get up to 6 months of funds for temporary housing while repairs are being made.