Are you looking to buy a fixer-upper? Do you have enough money to buy the home but no additional funds to pay for the rehabilitation costs? Wouldn’t it be great if you could just roll all of those costs into your mortgage? This is exactly why the FHA 203k loan program was developed.

If you already know about the program and want to speak with someone now about your personal scenario, then contact us here and a qualified FHA 203k Rehab Loan officer will walk  you through the process and will answer all of your questions.

What is an FHA 203k Rehab Loan?

The FHA 203k Rehabilitation loan is one that includes the purchase of the home as well as the rehabilitation or renovation costs. This program was developed for those who would like to purchase an older home that needs lots of work. Traditional mortgages do not allow funding for these kinds of repairs. With those mortgages, you are only able to borrow a percentage of the purchase price and no funds available for rehabilitation.

Click to Connect with an FHA 203K Rehab Lender

Pros and Cons of an FHA 203k Rehab Loan


  • You can get a fixed or adjustable rate mortgage
  • You get the cash needed to make significant repairs
  • In addition to the rehab costs, you can borrow the money to make 6 months of mortgage payments while you are making the repairs.
  • You can borrow up to $35,000 to make the repairs.
  • You may be able to also get money for cosmetic repairs.
  • A credit score of only 640 is needed to qualify.
  • The down payment requirement is only 3.5%


  • The interest rates are typically a bit higher
  • Not all lenders offer the 203k rehab loans. We are connected to those who do.
  • A construction consultant is needed.
  • It sometimes takes longer to close these loans.
  • You must have mortgage insurance.
  • These loans are not available for investment properties.
  • You cannot do the repairs yourself. You must hire a licenced contractor.

What is the process?

  1. Contact the lender to apply for the loan here
  2. Get approved for the loan
  3. Find an FHA approved contractor to do the work
  4. Close the loan
  5. The contractor completes the repairs
  6. You move into your newly remodeled home

Are You Eligible for an FHA 203k Rehab Loan?

  • Credit scores as low as 580 although some lenders will not go below 620 or 640.
  • Down Payment of 3.5% of the total borrowed amount (purchase plus rehab dollars needed).
  • The down payment can be gifted from a family member.
  • Debt to Income ratio no higher than 43% – Meaning your mortgage, insurance and taxes cannot exceed 43% of your gross monthly income.
  • Purchase price plus rehab costs cannot exceed 110% of the proposed future value of the home or total costs.
  • You must plan to occupy the home as your primary residence.
  • You must be a US Citizen or lawful permanent resident.

There are two Types of FHA 203k Rehab loans

203k Streamline – Here, you are permitted to change a lot of the non structural repairs such as…

  • Kitchen or bathroom remodeling
  • Appliances
  • Flooring or carpets
  • Electrical and plumbing
  • Painting
  • Waterproofing the basement
  • Decking and patios
  • Septic or well repair and replacement
  • Lead paint or asbestos removal
  • Heating, air conditioning, and energy efficient improvements
  • Etc

203k Standard Loan – Here you can make any improvement to the home that you want that is not a luxury amenity and the changes must be permanent. Meaning, things that you cannot take with you if you sell the home (ie a hot tub). Here, you can make the same changes as above in the 203k streamline PLUS here are some examples of other changes that you can make with the 203k standard but not the streamline.

  • Converting a one family home to a multi unit home.
  • Sewer and gas lines
  • Adding wheel chair access
  • Additions or moving walls
  • etc

*You cannot do things like add a pool or landscaping with this money.

FHA 203k Rehab loan rates – You can expect the rate for one of these loans to be up to 1% higher than a standard FHA loan. Still, these rates will be a lot lower than if you got a traditional non-FHA construction loan. Click Here to Find Out Your FHA 203k Mortgage Rate

An FHA 203k Rehab Loan can be an amazing investment

Just imagine this and it happens every day. You have your eye on a home that you can buy for $200,000. The kitchen and baths are basically destroyed and the whole place needs paint and the carpet removed. It needs about $30,000 or work to make the home look up to date. Meanwhile, similar homes in the neighborhood  with newer kitchens and baths are selling for $300,000. Now, you are able to buy the home and transform it into something that is worth a lot more. You could essentially build that additional $70,000 in equity quickly.

Or, just imagine this…  you buy a home and convert it to a 2 family. Now you just added more value. Possibly live in one and rent the other or sell a home that is worth much more now.

First Time Home Buyers

The FHA 203k Rehab Loan can be great for first time home buyers. They are often limited in available funds for the down payment and rehab costs. They are also typically younger with plenty of energy to take on a project.

Frequently Asked Questions:

Do FHA 203k Rehab loans require mortgage insurance? Yes, typically .85% of the loan amount but you should speak to an FHA loan officer to find out specifically as it relates to your scenario.

Can I use the FHA 203k rehab loan money for anything I want? No, there are specific things that you can use the rehabilitation money for. Your FHA lender can help walk you through which repairs will qualify.

How much of a down payment is required? You will need 3.5% of the total loan amount which is amazing considering you are able to borrow more than the purchase price of the home.

What are the FHA 203k rehab loan credit score requirements? FHA guidelines state as low as 580 but some lenders may require a higher score than that.

Can I do the work myself? I am handy! No, you must hire a licensed contractor and he must be an FHA approved contractor

Can I get an FHA 203k rehab loan to finance an investment property? No, only homes that you plan to use as your primary residence will qualify.[/vc_column_text]


More Information on FHA 203k Rehab Lenders – FHA Lenders

Info on 203k Mortgage Insurance – HUD

We are able to help you to find an FHA 203k rehab lender in the following states: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming.