FHA 203(k) rehab loans: buy it and fix it with one mortgage
The FHA 203(k) program rolls the purchase of a home and the cost of repairing it into a single mortgage. It opens up the houses other buyers walk away from, and it can be used to refinance a home you already own that needs work.
Purchase and renovation financed together, instead of a mortgage plus a separate renovation loan.
Based on the finished value
The loan can be sized against what the home will be worth once the work is done.
Two versions
A limited 203(k) for smaller, non-structural work and a standard 203(k) for larger projects.
Contractor draws managed
Repair funds are held and paid out as the work is completed, not handed over up front.
Step by step
How it runs, start to close
1
Find the home and the contractor
You will need a licensed contractor's bid for the work before the loan can be sized.
2
Scope and appraisal
The appraisal values the home as it will be after the repairs.
3
Close on the purchase
Repair funds go into an escrow account at closing.
4
Work gets done, funds get released
The contractor is paid in draws as each stage is completed and inspected.
Is it the right fit?
The fifteen-minute call that settles it
One FHA-insured loan that covers the price of the home and the cost of the repairs, so a house that needs work stops being a house you cannot finance.
Whether it is the right program depends on your credit, your savings and the
property. We run it against the alternatives with your real numbers, and if another
program suits you better, we say so.
What is the difference between a limited and a standard 203(k)?
The limited version covers smaller, non-structural repairs such as flooring, a kitchen or a roof. The standard version covers larger and structural work, and uses a HUD consultant.
Can I do the work myself?
Generally no. 203(k) repairs are done by a licensed contractor. We can tell you where exceptions exist.
Can I use a 203(k) on a home I already own?
Yes. A 203(k) can be used as a refinance to renovate the home you live in.
How long does the renovation have to take?
HUD sets completion timelines for each version of the program. We give you the current rules before you sign a contract.
What can the money be spent on?
Most permanent improvements: kitchens, bathrooms, roofs, flooring, systems, accessibility and energy upgrades. Luxury items such as a new pool are generally excluded.
Does a 203(k) take longer to close?
Usually a little longer than a standard FHA purchase, because the contractor bid and the scope are part of the file. Getting the bid early is the biggest time-saver.
Purchase · Refinance · Pre-approval
Know what you can borrow before you fall for a house
Start the secure application online, or call the office and talk it through first. Either way you get a real answer, not a range.
