FHA 203(k) Rehabilitation Mortgage Insurance
U.S. Department of Housing and Urban Development (HUD)
Program Overview
The FHA 203(k) program allows homebuyers and homeowners to finance both the purchase (or refinance) of a house and the cost of its rehabilitation through a single mortgage. This eliminates the need for multiple loans and reduces closing costs. Two versions are available: Standard 203(k) for major renovations over $35,000, and Limited 203(k) for minor repairs up to $35,000. Eligible improvements include structural alterations, modernization, elimination of health and safety hazards, energy efficiency upgrades, accessibility modifications, luxury improvements, and property repairs. Maximum loan amount depends on area FHA limits.
Eligibility Requirements
• Meet FHA credit requirements (typically 580+ credit score for 3.5% down)\n• Property must be primary residence\n• Property must be at least 1 year old\n• Repairs must meet HUD standards\n• Debt-to-income ratio limits apply
Additional Requirements
• FHA-approved lender\n• Property appraisal and inspection\n• Detailed repair plan and contractor bids\n• Homebuyer education for first-time buyers\n• Mortgage insurance premiums required
How to Apply
1. Find an FHA-approved 203(k) lender\n2. Get pre-approved for loan amount\n3. Find property and obtain contractor bids for repairs\n4. Lender orders appraisal based on after-improved value\n5. Submit complete loan application with repair plans\n6. Close on loan and funds held in escrow for repairs\n7. Complete renovations with approved contractors\n8. Lender inspects work and releases escrow funds