FHA 203k loan
An FHA 203(k) loan puts the price of a fixer-upper and the cost of its repairs into one mortgage, with as little as 3.5% down. Enter two numbers to see what you'd borrow.
Type in your interest rate or the value after repairs
Type in the price and repair cost, and you'll see your loan.
These numbers assume your credit score is 580 or higher, the loan runs 30 years, and the upfront premium is added to the loan. The loan also can't go past the cap FHA sets for your county: find your county's limit. Own the home already? A 203(k) lets you refinance your mortgage with the repairs added, and the lender request further down also takes homeowners.
- Minimum down payment required
- 3.5%
- Repair cap on a Limited 203(k)
- $75,000
- Mortgage insurance paid upfront
- 1.75%
- Most loans: yearly premium
- 0.55%
Limited 203k loan vs Standard 203(k)
| Rule | Limited 203(k) | Standard 203(k) |
|---|---|---|
| Repair cost | As much as $75,000 (energy work can go on top of that) | $5,000 at a minimum, and the whole loan has to fit within FHA's county cap |
| Kind of work | Minor remodeling and nonstructural repairs | Remodeling and major, structural repairs |
| 203(k) consultant | Not required | Required, approved by HUD |
| Living elsewhere during the work | Not for more than 30 days in total | Yes, and for the period you can't live in the home, the loan can cover up to 12 months of mortgage payments |
| How long the work can take | A job expected to run over 9 months can't go through the Limited option | Set by the lender, 12 months at most |
Sources: Mortgagee Letter 2024-13 and HUD's 203(k) program page.
Which costs can an FHA 203(k) loan cover?
Projects the loan covers
- Electrical systems, plumbing, heating and air conditioning
- New kitchen appliances, plus kitchen and bathroom remodels
- A new roof, new gutters and new siding
- Energy-saving upgrades, windows and flooring
- Adapting the home for someone who is disabled
- Driveways, decks, porches and fences
- Attic and basement finishing
- Standard only: structural repairs and additions
- Building an accessory dwelling unit that's attached to the house
Costs it can't cover
- Building a new swimming pool (you can repair one that's already there)
- Outdoor hot tubs, spas and saunas
- Outdoor fireplaces and barbecue pits
- Gazebos and tennis courts
- Whatever doesn't get added to the home permanently
- Any space used only for business purposes
You can use it for a townhome, a one to four unit house you live in, or an eligible condo unit (only for work inside the unit). A building with at least 51% homes or a manufactured home that's titled as real estate also qualifies. A Standard 203(k) can roll the consultant's fee into the loan. For unexpected issues uncovered during the job, lenders may add a contingency reserve no higher than 20% of the repair bill.
These points come from the consumer fact sheet HUD publishes for the 203(k), the program comparison sheet and Handbook 4000.1. Getting a Standard 203(k) means hiring a HUD-approved 203(k) consultant.
FHA 203k loan requirements
- Living in the home yourself is required. A 203(k) isn't open to investors. Being a first-time buyer isn't necessary.
- If your score is 580 or better, you can borrow as much as 96.5% of the cost and put down 3.5%. The limit falls to 90% for scores from 500 to 579.
- Borrowing tops out at 96.5% (90% if your score is 500 to 579) of the smaller of two figures. Those are the price plus the repairs and 110% of what the home will be worth after repairs (100% for a condo).
- The upfront mortgage insurance premium is 1.75% of the loan. On top of that, a yearly premium of 0.55% lasts for the whole loan on most 30-year loans where you put down less than 5%.
- Your loan must stay within FHA's mortgage limit for your county, and HUD sets that limit every year (HUD's tool).
Talk to a 203(k) lender
Tell us where you're buying and a lender that makes 203(k) loans can go through your numbers with you.
Rather not call? Send your details and the lender will reach you.
An FHA 203k renovation loan, step by step
- Choose your version: Limited covers up to $75,000 in nonstructural work, while Standard is for structural work or bigger amounts.
- Look for a lender that offers 203(k) loans and have them review your numbers.
- A Standard 203(k) requires hiring a HUD-approved 203(k) consultant; with a Limited one you can skip it.
- When you close, the seller gets part of the loan and the rest is placed in an escrow account that funds the repairs.
- The lender pays out repair funds when each part is done, within the deadline it sets. A Standard 203(k) allows no more than 12 months.
How does the work get paid for with a 203(k) rehab loan?
With an FHA 203k renovation loan, you never get the repair money as cash. It stays in escrow and goes toward the work as it's done. For someone who already owns the home, a 203(k) can refinance the mortgage and add the repairs as well.
In many states, you can combine a 203(k) with a state down payment program. Check the first-time buyer programs in your state or the 203(k) page from HUD.