Every home has potential with the right loan
Expand your realm of possibilities with an FHA 203(k) loan. Buy a home and make renovations with one loan or given your current home a little TLC. Just 3.5% down.
What is an FHA 203(k) loan?
An FHA 203(k) Renovation Loan is a government-backed mortgage insured by the Federal Housing Administration (FHA) that allows eligible home buyers to finance both the purchase of a home and the cost of eligible renovations with a single loan. For eligible homeowners, it provides a low-cost way to finance updates and repairs. Backed by the FHA, this renovation option offers low down payments and lenient requirements.
Highlights
FHA 203(k) features
Two ways to finance your renovations
There are two types of FHA 203(k) loans. Choosing which one is right for you depends on your types of renovations an budget. Check out the comparison between the two programs below.
Limited FHA 203(k)
Best for: Cosmetic updates and smaller renovation projects
- Max renovation cost: $75,000
- Min renovation cost: none
- Ideal for: flooring, paint, roofing, HVAC, and appliances
- Home must be livable during renovations
- No FHA consultant required
Standard FHA 203(k)
Best for: Major renovations, structural repairs, bigger budgets
- Max renovation cost: FHA Loan limits
- Min renovation cost: $5,000
- Ideal for: kitchens, room additions, foundation repairs, structural changes, and extensive remodeling
- Home may be unlivable during renovations
- FHA 203(k) consultant required to oversee the project
What renovations can I make with an FHA 203(k) loan?
With the Standard FHA 203(k) loan, you can make a wide variety of repairs.
- Roof repairs or replacement
- Heating and air conditioning (HVAC) updates
- Plumbing and electrical repairs or upgrades
- New flooring
- Interior or exterior painting
- Energy-efficient improvements, like insulation, windows, or doors
- New kitchen appliances
- Accessibility modifications for easier mobility
- Finishing or updating attics and basements
- Well or septic system repairs
- Driveway repairs
- Fence repairs
- Deck, patio, or porch repairs and improvements
- Landscaping and other outdoor improvements
Frequently Asked Questions
We’re here to help! Find answers to your everyday banking questions.
After your renovation plans and contractor estimates are approved, the cost of eligible improvements is added to your mortgage. Funds for the renovation are held in an escrow account and distributed as the work is completed according to FHA guidelines.
An FHA 203(k) loan can finance a wide range of home improvements, including:
- Kitchen and bathroom remodels
- Roof replacement
- Flooring and painting
- HVAC, plumbing, and electrical updates
- Energy-efficient improvements
- Accessibility modifications
- Structural repairs (Standard 203(k) only)
- Room additions (Standard 203(k) only)
A Limited FHA 203(k) is designed for non-structural repairs and cosmetic improvements with a maximum cost of $75,000, while a Standard FHA 203(k) is intended for larger renovation projects involving structural repairs, room additions, or extensive remodeling that can exceed $75,000. Your home must be liveable during Limited FHA 203(k) renovations while it can be unlivable during Standard FHA 203(k) renovations.
Eligibility is similar to other FHA loans. Qualified borrowers typically need to meet FHA credit, income, debt-to-income, and occupancy requirements. The home must also meet FHA eligibility guidelines.
Qualified borrowers may purchase a home with as little as 3.5% down, depending on their credit profile and FHA guidelines.
Yes. An FHA 203(k) loan is one of the most popular financing options for purchasing a home that needs repairs or renovations because it combines the purchase price and renovation costs into one mortgage.
An FHA 203(k) loan is designed for purchasing or refinancing a home while financing renovations at the same time. A home equity loan or HELOC is generally used by homeowners who already have equity in their home and want to borrow against it for future improvements.