203(k) Loans old

203(k) Loans

203(k) loans are used for building new homes and the renovation of existing homes. These loans cover a property’s closing costs, labor needed for the project completion and fees associated with required permits. This loan type can be used for the renovations and the purchase of a home in a single loan versus two separate loans. A 203(k) loans is ideal for borrowers interested in fixing and flipping properties for themselves or as a business model.


To encourage revitalization of older neighborhoods, damaged homes and the development of less popular housing areas FHA provides two (2) loan types to help home buyers reserve a portion of their loan funds to accomplish both structural and non-structural repairs.

A standard 203k loan is provided for properties that only require structural renovations.

Repairs and Improvements eligible for 203(k) include:

  • Repair/Replacement of roofs, gutters and downspouts
  • Repair/Replacement/Upgrade of existing HVAC, plumbing, and electrical systems
  • Minor remodeling (Ex: kitchens, which does not involve structural repairs)
  • Exterior and interior painting, including lead based paint stabilization or abatement
  • Weatherization, including storm windows and doors, insulation, and weather stripping
  • Purchase and installation of appliances (including, but not limited to,  free-standing ranges, refrigerators, washers/dryers, dishwashers, and microwaves)
  • Improvements for general accessibility specifically for persons with disabilities
  • Repair, replacement or the addition of exterior decks, patios and porches
  • Basement waterproofing or remodeling (which does not involve structural/sculptural repairs)
  • Window and door replacement and exterior siding replacement.
  • Well or septic system repair or replacement

Ineligible Repairs include:

Luxury items and improvements that do not become a permanent part of the property are not eligible as a cost rehabilitation. 

Some examples include: 

  • Barbecue pits 
  • Bathhouses
  • Dumbwaiters
  • Exterior hot tubs
  • Saunas/spas/whirlpool baths
  • Outdoor fireplaces or hearths
  • Photo murals
  • Swimming pools
  • Television antennas and satellite dishes
  • Tennis courts
  • Landscaping

However, the homeowner can use the 203(k) program to finance such items as painting, room additions, decks, and other items, if the home does not need any other improvements (Ex: Existing structural damage and foundation repairs).

A buyer looking to complete these types of renovations should consider applying for a limited 203(k) loan that covers non-structural upgrades, such as painting, new counters, cabinets, patching holes, replacing doors, repair/installation of HVAC systems, and purchase/installation of new appliances.The maximum repair amount which can be financed using a Limited 203(k) loan is $35,000 with no minimum requirement for repairs.

Eligible properties for a 203(k) loan include:

  • Attached / Detached Single Family Residential Properties
  • PUDs
  • 2-4 Unit Properties
  • HUD-Approved Condominiums
  • Manufactured Housing


Before applying for a home renovation loan that fits your needs, decide how much money you calculate will be necessary to begin the construction for your home renovation project or construction. If you choose to hire a contractor, be sure to ask them to give you a reliable estimate regarding the total cost of the home repairs needed that they have assessed. Once you have that number in mind, you may begin to discuss the possibility of a home renovation loan with your mortgage broker and the different benefits that it may have for your project. Different loans offer different amounts to borrowers, so talking to a mortgage broker can help determine the specific loan and amount that will fit best to your project’s goals. Our team is here to help set you up for success. For any further questions about the types of home renovation loans we offer or if you qualify for an FHA 203(k) loan, please do not hesitate to contact us today!

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