Need Cash For Renovations? Try FHA Renovation Loan Programs! 203K Home Improvement Loans

FHA 203K loans are federally insured loans backed by the Federal Housing Administration. Each loan allows for homebuyers to finance the cost of home improvements within the loan amount. FHA 203K loans offer a solution that helps borrowers and lenders provide a fixed rate loan that covers both the acquisition and rehabilitation of a property.

Couple reviewing blueprints

The FHA 203K Renovation Loan Program Allows Home-Buyers To Rehab Their New Home.
Looking To Renovate Your Home? The FHA 203K Loan Program Offers A Path To More Equity.
An FHA 203K Loan Can Advance the Cash You Need To Do Your Home Renovations.
Contact Lee Smith To Get Started On Your Home Renovation Projects With An FHA 203K Loan.

How You Build Equity

After improvements, the value of the property is determined during the appraisal by one of two methods (whichever is less):

(1) the value of the property after rehabilitation plus the cost of rehabilitation, or
(2) 110 percent of the appraised value of the property after rehabilitation.

Our clients, on average, gain an 18% equity position upon successful completion of a home renovation with the FHA 203K loan.


Eligible properties must be primary residences only. Eligible properties include:

  • Condominiums (Renovation improvements are limited to the interior of the unit)
  • Single-Family Residences (Attached homes, detached homes, and town homes)
  • One-to-Four Multifamily Unit Properties
Who is eligible? This loan is best suited for those needing more flexibility on debt-to-income ratio, those needing lower down payment requirements, and first-time homebuyers like Sean and Marie, who reached out to Lee Smith for their renovation project.

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Types of Loans

There are two types of renovation loans we offer, both of which require only a 3.5% down-payment.

Limited 203K Loan Program

The limited 203K permits homebuyers to finance up to an additional $35,000 for repairs into their mortgage to purchase and improve or upgrade the home before move-in or to refinance an existing mortgage and add up to $35,000 for repairs or improvements. Homebuyers can quickly and easily tap into cash to pay for property repairs or improvements, such as those identified by a home inspector or FHA appraiser.

The Following Repairs Can Be Financed:

  • Repair/replacement of roofs, gutters, and downspouts
  • Repair/replacement/upgrade of existing HVAC systems
  • Repair/replacement/upgrade of plumbing and electrical systems
  • Repair/replacement of existing flooring
  • Minor remodeling, such as kitchens, which does not involve structural repairs
  • Exterior and interior painting
  • Weatherization, including storm windows and doors, insulation, weather stripping, etc.
  • Purchase and installation of appliances, including free-standing ranges, refrigerators, washers/dryers, dishwashers, and microwaves
  • Improvements for accessibility for persons with disabilities
  • Lead-based paint stabilization, or abatement of lead-based paint hazards
  • Repair, replacement, or the addition of exterior decks, patios, and porches
  • Basement remodeling which does not involve structural repairs
  • Basement waterproofing
  • Window and door replacement, and exterior siding replacement
  • Well or septic system repair or replacement

Standard 203K Loan Program

The Standard 203K permits homebuyers to finance unlimited amount for repairs into their mortgage to purchase and improve or upgrade the home before move-in or to refinance an existing mortgage and repair cost for repairs or improvements to the home. The rehabilitation cost, although unlimited, cannot exceed the after-improved-value of the home, including the sales price.
For example, sales price + rehabilitation cost cannot exceed the after improved value of the home. The extent of the rehabilitation covered by 203K loan may range from relatively minor (though exceeding $5000 in cost) to virtual major reconstruction. It can also cover the conversion of a property of any size to a one- to four- unit structure.

The Following Repairs Can Be Financed:

  • Structural alterations and reconstruction
  • Modernization and improvements to the home’s function
  • Elimination of health and safety hazards
  • Changes that improve appearance and eliminate obsolescence
  • Reconditioning or replacing plumbing; installing a well and/or septic system
  • Adding or replacing roofing, gutters, and downspouts
  • Adding or replacing floors and/or floor treatments
  • Major landscape work and site improvements
  • Enhancing accessibility for a disabled person
  • Making energy conservation improvements
  • Redesigning floor plans, adding bathrooms
  • Almost any repair is eligible
Ready to learn more? Lee Smith will have a heart-to-heart conversation about how FHA 203K loans work. Lee is no-pressure and full of great information. Use our contact form below to get in touch and we will reach out to you shortly!

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