FHA 203k Loan Requirements 2026

The FHA 203(k) Rehab Loan lets eligible homebuyers and homeowners combine the purchase or refinance of a home with the cost of necessary repairs and improvements into a single FHA-insured mortgage. Unlike traditional loans, the 203(k) program covers both the home and its renovation costs — including structural changes under the Standard 203(k) and smaller upgrades under the Limited 203(k)

Many home buyers want to purchase a fixer-upper and have the money for a down payment, but lack the funds needed to also make the repairs or improvements needed to complete the project. The FHA 203k loan is a unique mortgage program that can help you to accomplish this goal.

Licensing – United Mortgage Corp (NMLS# 1330)

What is an FHA 203k Loan?

An FHA 203k loan is an FHA insured mortgage which allows home buyers to borrow the funds needed to purchase the home in addition to the costs to renovate or modernize the home.

FHA eligible repairs and updates can be made using FHA approved contractors for primary residences using one single renovation loan.

There are two versions of the FHA 203k loan. The Standard 203k allows for repairs which can include major structural changes and repairs. There is also the more popular Streamline 203k version which is perfect for light remodeling or just the replacement of appliances.

Click to get speak with an FHA 203k loan specialist

Benefits of an FHA 203k Loan

The main benefit is having the ability to finance the purchase price and the renovation costs all with one loan and with a great interest rate. The 203k guidelines also allow for the funds to cover the costs of your temporary housing while the remodeling is being done.

The 203k rehabilitation loan can also be used for a refinance where you would be able to cash out the funds needed for the repairs on a home that you already own.

Get Pre-Approved for a 203k Rehab Loan Before You Shop

Pros and Cons of an FHA 203k Loan

Pros

Credit Scores down to 500 permitted
Low down payment of only 3.5%
Borrow more than the purchase amount to make necessary repairs
Borrow up to 6 months of mortgage payments while your home is being repaired.
Available in both fixed and adjustable rates.
Available for refinances if you need to rehabilitate a home you already live in

Cons

Interest rates are higher than standard FHA rates
A lot of paperwork
The closing time is very long due to the paperwork and coordination required

How the FHA 203k Loan Works

When you begin the process of an FHA 203k loan, you should be prepared for a lot of paperwork and a longer timeline. Here are some basic steps that you can expect to take:

Discuss your FHA 203k loan options with one of our FHA loan officers before looking for a home.
Find the home and enter into a contract with the seller.
The borrower must visit with a 203(k) repair consultant. This individual will help guide you through the process.
Identify the FHA approved repairs or remodeling that are needed. The loan can be used for updating or a complete remodel of the home. There is a minimum repair cost of $5,000
Interview and get quotes from an FHA approved contractor.
Complete the required paperwork.
The loan, the contractor and the remodel plan are approved.
Close on the loan
Begin the remodel process which must be completed within 6 months
Inspections & payment release draws based upon construction progress
The consultant helps with bank inspections and manages the payments to the contractor

Our loan officers can help you with this process. Click to connect with an FHA 203k loan officer to discuss your options.

FHA 203k Loan Requirements

These are some basic and topline requirements for the 203k renovation loan:

All borrowers must meet the FHA credit score requirements. The minimum FICO score allowed is 500
All borrowers must have the minimum down payment of 3.5%, or 10% if the FICO score is below 580
You must have a two year work history
The maximum debt to income ratio is 56.9%
You will need to provide tax returns, W2s and bank statements.
The loan amount cannot exceed the FHA loan limits for your county.
The home must be your primary residence and meet property eligibility requirements.
You will need to hire an FHA 203k consultant.

Read our article on FHA loan requirements to learn more about qualifying for an FHA loan. It will provide you with a more in-depth view on how to qualify for an FHA loan.

Update – FHA 203k rehab loans are available with lower credit scores again.

What Repairs Can be Made with a Standard FHA 203k Loan?

With the standard 203k rehab loan, homeowners can borrow the funds needed to complete repairs or the remodeling project types listed below. It is important to note that the rehab funds go into an FHA escrow account. As the work is completed, the funds are released directly to the contractor.

Improvements to the home’s air conditioning, heating and other major functions.
Updating of plumbing and electrical systems.
Structural repairs and alterations (foundation, framing, etc).
Elevating the structure or foundation.
Purchasing a structure on one site and moving it to a foundation on another site.
Improvements that help with the home’s appearance or bring it up to current standards.
Installation or replacement of well and septic systems.
Connecting the home to public sewer and water systems.
Replacement of roofing, siding, gutters and downspouts.
Replacing the floors.
Making aesthetic changes to make the home look better.
Removing any health and safety concerns from the home such as lead paint.
Improvements to make the home energy efficient (ie solar).
Landscaping and other exterior improvements.
Installing or repairing driveways, walkways and fences.
Repairing or removing an inground swimming pool but NOT installing a new one.
Repairing or installing a new porch, deck or patio.
Making the home handicapped accessible.
Converting a 1 family to a 2, 3 or 4-unit property.

With the standard 203kb loan, these extensive repairs can be made.

Other Costs and Fees that Can be Financed with the FHA 203k Loan

The following fees may be incurred by the borrower during the process and can also be borrowed or included in the loan.

Architect fees
Engineering fees
The 203(k) consultant fee
Inspection fees
Title update fees
Building permits
Any feasibility studies if needed.
6 months of payment reserves if the borrower needs to live elsewhere while the home is being repaired.

How to Find an FHA 203k Contractor

We recommend that you look for a contractor who has experience in dealing with FHA 203k loans. There is additional paperwork that they will need to complete before the process can begin. They also need to be familiar with how they are reimbursed for the work through this program.

Your local home improvement store may be able to recommend a contractor who has done work through this program before.

The contractor must provide a Work Write Up which is an estimate of costs and time to complete the project. The lender will have to review the contractor’s ability to complete the job professionally, timely and within budget.

FHA 203k Eligible Properties

Each property to be financed with an FHA 203k loan must meet the following criteria for eligible properties:

The property must be a 1-4 unit structure that will be used as the borrower’s primary residence.
FHA approved Condo where the improvement to be done will only be in the interior.
Manufactured housing is approved but structural changes may not negatively impact the standards set by HUD for manufactured housing.
Mixed use properties if at least 51% of the building will be used for residential housing and if the remaining commercial use of the building does not negatively affect the health or safety of the occupying residents.
A HUD REO property.
The property must have been built at least one year prior to the FHA case number being issued for the FHA 203k loan.
The property must have a certificate of occupancy.
If the property currently is not FHA eligible due to safety concerns or hazards, the loan can still be approved if the appropriate mitigation and repairs will be done during the rehab process.
If the property currently has an FHA 203k financed loan on it, the repairs must be done and the loan must be closed out electronically before a new FHA 203k case number can be issued for that same property.

The 203k rehab loan offers borrowers an amazing investment opportunity to purchase a single-family residence and convert it into a multi-family residence using the loan proceeds. This will afford you the opportunity to live on one unit and rent out the other.

Streamline 203k loan (limited version)

The streamline FHA 203k loan is to be used for minor repairs and upgrades. These are for non-structural repairs or improvements. A 203(K) consultant may be used but it is not required. The maximum repair amount cannot exceed $35,000. This loan is sometimes called the FHA Limited 203k loan.

Improvements that can be made with a limited 203k loan are:
Repair or replacement of septic systems and wells
Connecting to public utilities
Removing health and safety hazards including but not limited to lead based paint.
Updating the plumbing and electrical systems
Updating the heating and cooling systems
Modernizing the home
Roofing and siding repairs or replacement
Repairing or installing driveways, fences and walkways
New kitchen appliances as well as washer and dryer.
Removing or repairing an in-ground pool
Smoke detectors
Decks, porches and patios

Under this program, the repairs must be completed within 6 months. Also, the borrower must not be displaced from the home for more than 15 days due to the nature of the repairs. The borrower may also do their own DIY work, but that work must be pre-approved, and they cannot be reimbursed for labor.

FHA 203k Refinance Loan

If you already own your home and would like to refinance and cash out additional funds to renovate, make repairs and upgrades in the home, then an FHA 203k refinance loan may be what you need.

Here are the basic requirements for an FHA 203k Refinance loan:

- The property must have been purchased at least 12 months earlier.
- There may be an appraisal required to determine the as-is volume as well as the after improved value.
- You can finance the repairs and improvements, refinance mortgage fees, and cash reserves.
- Maximum mortgage amount is the FHA loan limit for the county where the property is located.

Documentation Needed for a 203k Rehab Loan

In addition to the documents needed for a standard FHA loan, the following documents will also be needed for an FHA 203k loan and a Limited 203k loan:

Identify of Interest Certification – This document is required when the property is being purchased from a family member, a business partner, or any other individual where a conflict of interest may be present.

Borrower’s Certification – This document states that there is NO identify of interest between the borrower and the seller, the 203k consultant, the lender, or any other third party that is part of the process.

203k Consultant’s Certification – This is completed by the consultant and it certifies that he or she inspected the property for compliance and completed the duties required by HUD.

Rehabilitation Self Help Loan Agreement Form – This form must be completed by the borrower if the construction work will be done by the borrower and without a contractor. In this case, the underwriter also has to verify that the borrower has the skills to do the job, details the costs to complete the project, etc. *Borrowers can perform the work themselves only if they get an exception.

Appraiser’s Repair Notes – If the appraiser identifies things that need to be fixed, the underwriter must make sure these repairs are included in the rehabilitation plan.

FHA 203k Borrower’s acknowledgement Form – This form HUD-92700-A must be completed by the borrower.

203k Consultant Final Work Write Up (for 203k Standard Only) – This is a cost estimate that needs to be completed by the consultant.

Architectural Drawings (for 203k Standard Only) – The lender must review all of the architectural exhibits.

Consultant / Borrower Agreement (for 203k Standard Only) – The lender must receive the written agreement between the consultant and the borrower detailing the fees and work to be completed by the consultant.

Contractor’s Cost Estimate (for Limited 203k Only) – This is the contractor’s itemized estimate of the costs to complete the rehabilitation.

FHA 203k Loan Lenders

Although FHA 203k rehab loans are available to all lenders who provide FHA loans, not all lenders offer them. These loans require more work on the part of the lender and they all do not have the resources to dedicate to closing FHA 203k rehab loans.

Lenders who do offer FHA 203k rehab loans may also have specific credit score requirements. The approval process would be the same as what you would experience with a traditional FHA loan.

If is important to work with us because we are familiar with FHA 203k rehab loans. If you are looking for a loan officer to speak with, just complete this short FHA 203k loan scenario form and select the 203k rehab option. We will contact you to discuss your options and to get pre-approved.

FHA 203k Loan Rates

The FHA 203k loan rates are going to be very similar to a standard FHA purchase loan. The rate offered will be based upon your credit scores, down payment, and a few other factors which makeup a lender’s rate sheet.

Today, FHA loan rates are also in line with conventional rates. Unfortunately, rates have increased significantly since the beginning of the year. This is impacting how much home buyers can be approved for.

When shopping for FHA 203k loan rates, you should compare the interest rate offered to the APR rate. The two rates should be very close. If the APR is more than a half point .5% higher than the interest rate, then you are paying a lot in fees.

To get a competitive quote without running your credit, please complete this short quote form.

Summary

The FHA 203k renovation loan is great for people who do not have the funds to purchase a home and then also come up with the money for the repairs when they are buying a fixer upper. The process for these loans is long and tedious. However, it can work out well for you in the end.

The most common version of this loan program is the FHA Limited 203k rehab loan. It requires less paperwork and can be implemented and closed sooner than the standard version. We recommend an FHA streamline 203k loan if you want to do a quick kitchen remodel in the home you are going to purchase.

If you are considering an FHA 203k loan, then click to connect to an FHA loan officer to have an initial discussion or even to get an FHA rate quote.

FHA 203k Rehab Loan Q&A

What is an FHA 203(k) Rehab Loan?

An FHA 203(k) Rehab Loan is an FHA-insured mortgage that combines the purchase or refinance of a home with the cost to repair or renovate it, allowing borrowers to finance both into a single long-term mortgage.

What types of FHA 203(k) loans are there?

There are two main types:

Standard 203(k) for major and structural renovations that cost $5,000 or more.
Limited 203(k) for minor, non-structural repairs and improvements up to defined limits.

What repairs are allowed with a 203(k) loan?

Eligible work includes structural reconstruction, elimination of health and safety hazards, modernization, roofing, plumbing, and energy-efficient upgrades, among other improvements permitted under FHA guidelines.

What credit and down payment do FHA 203(k) loans require?

Borrowers typically must meet standard FHA underwriting, including a minimum credit score (often 580 for 3.5% down) and debt-to-income guidelines, although lender overlays may adjust these figures.

How do FHA 203(k) loan funds get used?

Loan proceeds include the purchase or refinance amount plus repair funds, which are placed in an escrow account and paid out in draws as contractors complete work per the HUD-approved plan.

Do I need a HUD-approved 203(k) consultant?

For Standard 203(k) loans, a HUD-approved 203(k) consultant is required to prepare the work write-up and cost estimate. For Limited 203(k), a consultant is optional.

How much can I borrow with a 203(k) loan?

The maximum 203(k) loan is usually limited to the lesser of 96.5% of the combined purchase price plus repair costs or 110% of the post-rehab appraised value.

Can I do my own renovation work with a 203(k) loan?

Under FHA rules, borrowers may be permitted limited “self-help” up to a small percentage of the project, but most lenders prefer using licensed contractors with HUD consultant coordination to avoid delays.

Is a 203(k) loan only for fixer-uppers?

No — you can also use it to refinance an existing home and include renovation costs, as long as the home meets FHA occupancy requirements and the scope of work qualifies.

How does the appraisal work with a 203(k) loan?

The appraisal for a 203(k) looks at the after-improved value — what the home will be worth once the approved rehabilitation is complete — which helps determine the maximum loan amount

Have FHA 203k Loans Been Suspended?

You may have heard talk about FHA suspending the 203k loan program. That is not the case and what you may be experiencing are individual lenders who have decided not to offer the program anymore. FHA 203k loans are still available and we do them every day.

With an FHA 203k loan, can I perform the work myself?

FHA guidelines state that the rehabilitation must be done by a contractor. However, an exception can be granted to allow homeowners to do the work themselves.

Can I use an FH 203k loan for a swimming pool?

FHA 203k rehab loans can be used to repair an existing pool but cannot be used to install a new one.

What are the FHA 203k mortgage rates?

The interest rates for an FHA 203k loan are typically higher than a traditional FHA loan. Still, the rates are extremely competitive and likely lower than a conventional mortgage.

How is a 203k different than a renovation loan?

The FHA 203k rehab loan is a single close mortgage that covers the cost of the home plus the renovations all in one loan. A typical renovation loan is just a small loan that is for renovations and is separate from your primary mortgage.

Mistakes to Avoid When Buying a Fixer Upper – From Petra Norris

Buying a Fixer Upper– From Paul Sian

We can help you to get an FHA 203k loan 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.