203k MADE EASY

Types of 203(k) Loans

The HUD FHA 203(k) loan program requires the normal FHA downpayment of 3.5% of the loan, which is the total of the purchase price and the cost of the repairs/improvements. Check with your REALTOR® to see if you can include your closing costs in your loan (in that case, the home will need to appraise high enough to cover those).

There are two types of 203(k) loans:

Streamlined 203(k)

• The FHA Streamlined 203(k) $5,000 to $35,000
• Only one contractor bid required
• Go to streamlined vs regular 203(k) for eligible items under the streamlined program

Full 203(k) (Over $35,000 or Structural)

• 203(k) over $35,000 and projects that are structural in nature
• Requires a HUD-approved 203(k) consultant
• $35,000 or more in repairs or improvements
• Requires three contractor bids
• Includes all items on the streamlined program, plus constructing new garages, structural repairs, additions, moving walls, etc.

203(k) Quick Facts

One to Four Units

Eligible properties include one to four-family dwellings that have been completed for at least one year.

Monthly Payment Reserve

Up to 6 months of mortgage payments, including the mortgage insurance premium, may be placed in escrow to cover the monthly payments during the construcion period.

Foreclosed Properties

203(k) loans can be used to purchase and rehabilitate foreclosed properties that do not meet the regular FHA requirements

Refinancing

203(k) loans can be used to refinance and improve a property that is currently owned by the borrower.