Want to Renovate? Need 203K Loan Advice?

Want to Renovate? Need 203(k) Loan Advice?

203(k) Loan Advice

You may be looking for a renovation loan and need some 203K loan advice. You’ve come to the right place!

What is a 203(k) Loan?

The FHA 203(k) allows you to include the repair/improvement costs in the loan amount on either a purchase or refinance with one closing. The funds for repair or improvement are held in escrow, and are released when the work is completed. The mortgage amount is based on the projected value of the completed project.

Encouragement from FHA makes this loan easier and faster to close than ever before.

Articles About 203(k) Loans

Before you decide to call me about 203(k) loan advice, you might want to take a quick peek at some actual 203k projects:

What Are the Advantages of a 203(k) Loan?

  • Finance up to 6 months of mortgage payments (PITI)
  • Special HUD down payment programs
  • Eligible for Energy Efficient Mortgage
  • An FHA assumable mortgage
  • One-to-Four Family Dwellings
  • Standard FHA Downpayment Programs Apply
  • Purchase or Refinance
  • Assumable FHA Insured Loan
  • All rehabilitation work is completed after loan closing

Which Properties are Eligible?

The FHA 203(k) Program allows:

  1. Any 1-4 unit properties which have been completed (with a certificate of occupancy) for at least one year. The properties must be acceptable according to the provisions of local zoning requirements.
  2. You may rehab homes that have been demolished or razed as a part of the rehabilitation process. However, you must keep part of the original foundation.
  3. You may move a home onto a foundation on the mortgaged property. But the proceeds from the sale of the previous location cannot be released until the foundation is properly inspected. Furthermore, the home must be satisfactorily attached to the new foundation.
  4. Property conversions. The buyer can convert a property from single family into a 2-4 unit, or from a 2-4 unit to a single family unit. The max is a 4 unit property. One unit must be owner occupied.
  5. A manufactured home that was built AFTER June 15, 1976, and has been on a permanent foundation for over one year. The unit must have been delivered to the site when it was new, prior to being occupied.
  6. A 203(k) can be used on a “mixed use” residential property provided it meets the following requirements:

* The floor space used for commercial purposes does not exceed:

  • 25% for a one story building
  • 33% for a three story building
  • 49% for a two story building
  • The commercial use does not affect the health and safety of the occupants
  • The rehabilitation funds will only be used for the residential functions of the dwelling and areas used to access the residential part of the property.

     7. Cooperatives are NOT eligible.

203(k) Eligible Improvements

The mortgage must include one or more of the items listed below:

*  Structural repairs and alterations.
Includes such items as additions to the structure, repairing any and all structural damage.

*  Improvements in functionality or modernization.
Includes such items as remodeled kitchens and bathrooms.

*  Changes for aesthetic appeal, and the elimination of obsolescence.
    New exterior siding and new doors.

*  Repair or replacement of plumbing, heating, air conditioning or electrical system.
    The buyer may install new plumbing fixtures, including interior whirlpool bathtubs.

*  Installation of Well and/or Septic System
    Must be installed or repaired prior to beginning any other repairs to the property.
Properties less than one acre in size can be limited on this item.

*  Replacement of flooring, carpeting or tiling

*  Energy conservation improvement
    New double pane windows and doors, storm windows, insulation, solar domestic hot water systems.

*  Major landscape work and site improvement
    Patios and terraces that improve the value of the property equal to the cost, or that are needed to preserve the
property from erosion. Tree removal is also acceptable it the tree presents a hazard to the occupants.

*  Improvements for easier accessibility to the handicapped

You Can Include the Following Items in the Work to be Completed

There are no Minimum Requirements for any of the following:

  • New cooking ranges, refrigerators and other stand alone appliances,
  • Painting and other cosmetic repairs.
  • Fencing, new walks and driveways, and general landscape work (trees, shrubs or seeding).
  • Repair of a swimming pool, up to $1,500.


  • You cannot include items that will not become a permanent part of the property.
  • You may not include luxury items. These include, but are not limited to: New swimming pools, exterior hot tubs, saunas, spas, tennis courts, and barbecue pits.

Costs That You Can Finance into 203(k) Loans

You can finance all of the following costs into a 203K loan:

  • Contingency Reserve (10-20%)
  • Inspection Fees
  • Title Update Fees
  • Mortgage Payments (If Applicable)
  • Architectural and Engineering Fees
  • Independent Consultant Fees
  • Permits and Other Miscellaneous Fees
  • Maximum FHA Loan Limits

Please refer to the HUD website for the most recent Lending Limit.

Need 203(k) Loan Advice?

I’m happy to talk to you on the phone!

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