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.
There are two types of FHA 203k loans available for home buyers and both require only a 3.5 percent down payment. The Limited 203k and the Standard 203k Repair Program.
LIMITED 203K LOAN PROGRAM
The following repairs can be financed with this program:
- 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
- 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
(2) 110 percent of the appraised value of the property after rehabilitation, whichever is less.