Real Estate

FHA 203k Basic Loan Information

With the FHA 203(k) Renovation Loan, you can purchase your primary home and renovate it — all with one convenient loan. This loan lets a buyer finance the cost of improvements into the purchase or refinance of the home, meaning you have one monthly payment that includes your mortgage and repair costs. The FHA 203k supports the following types of situations:

  • Purchasing a fixer-upper home in need of upgrades, repairs or larger renovation projects from a traditional home seller, even if the homes is being sold “as is.”
  • Purchasing an up to 4 unit property in need of upgrades or repairs. You must live in one of the units as your primary residence.
  • Buying a foreclosed property from banks, housing agencies and government-sponsored enterprises, as well as properties eligible for short-sale transactions

Some of the FHA 203k basic features are:

Low Down Payments — A minimum down payment of 3.5% down is required. The down payment funds can be money that you have saved, or may be a gift from family members. Loans and grants from down payment assistance programs may also be available. For refinances, the loan amount is up to 97.75% of the value after renovation is complete.

Flexible Underwriting Guidelines — Typically, you must have a credit score of 640 or higher, and you do not need to be a first-time homebuyer to be eligible for a 203(k) Renovation Loan. If renovation is extensive and the underwriter determines you cannot live in the home during construction, up to six months of mortgage payments — principal, interest, tax and insurance — may be included in the 203(k) Loan, so you don’t need to make double housing payments when the home is uninhabitable.

Many Types of Property Are Eligible — Single-family residences (either stand-alone homes or attached homes, like row homes), and homes in planned unit developments (PUDs) are 203(k) eligible. Although some restrictions and special rules apply, you can also use 203(k) Renovation financing to purchase and refurbish condominiums, two-to-four unit properties and mixed-use properties.

Maximum Loan Amounts for 203(k) Loans — The maximum amount you can borrow with a 203(k) Loan for a purchase is the lower 96.5% of the sales price plus improvements or 96.5% of the after-improved value. For a refinance, it is 97.75% of the after-improved value. The amounts are also subject to the standard FHA Loan limits, which vary by market. They currently range from $271,050 to $625,500 for a single-family property. To check the current loan limits by county, go to or check with your Loan Officer for the current limits.

Our upcoming FHA 203k will cover more detail, including the differences between the traditional FHA 203k and the FHA 203k Streamline product. The Workshop is Thursday, 1/29 at 5:30pm at our offices at 913 Florida Avenue, NW. Participation is free. Please RSVP at or on Facebook.

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