Buying a home that needs some TLC? An FHA Renovation Loan, also called an FHA 203(k) loan, can be the perfect way to finance both the purchase and renovations in one mortgage. Whether you’re dreaming of a fresh kitchen, repairing safety issues, or tackling a major overhaul, understanding how an FHA Renovation Loan works will help you avoid surprises and keep your project moving smoothly.
If you want to renovate with confidence, here’s everything you need to know bout FHA Renovation Loans!
What Is an FHA 203(k) Loan?
If you want to buy (or refinance) a home and fund repairs or improvements in a single mortgage then the FHA Renovation Loans may be a good fix! Instead of taking out separate financing, you can close on your purchase with the renovation budget built right into the loan.
There are two types of FHA 203(k) loans:
- Limited 203(k): For non-structural repairs and improvements, up to $75,000.
- Standard 203(k): For structural repairs, major renovations, or more extensive work. Minimum repair cost is $5,000, with no set maximum beyond FHA loan limits.
Limited vs. Standard 203(k): Which FHA Renovation Loan Fits Your Project?
Choosing the right version depends on the scope of your plans:
| Feature | Limited 203(k) | Standard 203(k) |
| Renovation Cap | Up to $75,000 | Minimum $5,000, no cap |
| Structural Changes? | Not allowed | Allowed |
| FHA Consultant Required? | Optional | Required |
| Project Timeline | Typically 3 months | Typically 9 months |
| Consultant Fees | Optional, can be financed | Required, $750–$2,000 (can be financed) |
If you’re unsure which FHA Renovation Loan fits your goals, Renee Duval & Bookend Lending LLC are happy to help you evaluate.
What “No Cap” Really Means for Standard 203(k)
There’s no fixed renovation dollar limit under the Standard 203(k), but your total mortgage must fit within the FHA county loan limit mentioned above.
For example:
- In Rockingham or Strafford, your total (purchase + renovation + reserves, fees, etc.) must stay at or below $914,250.
- In other NH counties, the limit is $524,225.
- If you’re combining with NH Housing, you’re also using there are income limits and sales price limits to consider. For full details on the 2025 Home First Program limits, you can click this link.
The Steps to a Successful 203(k) Loan
If you’re ready, let’s look at how the process works, step by step:
1. Prepare a Clear Purchase Contract
Your purchase contract should state clearly that you’re using an FHA 203(k) Renovation Loan. This ensures everyone—seller, title company, appraiser—understands your financing includes funds for repairs.
2. Walk Through the Property and Create an Initial Assessment
Before hiring a contractor, take time to:
- Walk the property with your REALTOR.
- Make a list of required repairs (to meet FHA Minimum Property Standards).
- Identify optional upgrades you’d like to include.
- Estimate costs to create a preliminary budget and written scope.
This step sets expectations and helps your lender structure the loan accurately.
3. Obtain a Detailed Contractor Bid
Before your loan can be approved, you’ll need a signed bid on contractor letterhead. It must include:
- Contractor’s name, address, phone, email, and contact person.
- Itemized labor and materials for each part of the project.
- Signatures confirming agreement.
If you’re using the Standard 203(k), your FHA consultant will review and verify this bid.
4. Ensure Contractor Eligibility
Contractors must meet several requirements:
- Licensing: In New Hampshire, general contractors aren’t licensed, but trades like electrical, plumbing, or HVAC require licensing.
- Insurance: Must carry general liability insurance, usually at least $1 million.
- Experience: Minimum of two years of experience with similar projects.
- Cooperation: Contractors agree to sign all lender and FHA forms, provide W-9 forms, share insurance certificates, identify subcontractors, allow inspections, and submit lien waivers with draw requests.
5. Plan for Permits
Some repairs require local permits. Either you or your contractor must:
- Check what’s needed with your town or city.
- Confirm permit costs.
Permit fees can be included in your renovation budget.
6. Set Aside a Contingency Reserve
To cover unexpected issues or price increases, lenders will add a contingency reserve (typically 10–15% of the contractor’s bid). If you don’t use these funds, they’re deducted from your final loan amount.
7. Special Requirements for Older Homes (Lead Paint)
If your home was built before 1978, special lead-safe practices apply:
- Repairs disturbing more than 6 square feet indoors (or 20 square feet outdoors) must be completed by EPA Lead-Safe Certified contractors.
- If the appraiser flags potential lead hazards, your contractor’s certification must be documented.
- You can include costs for testing, containment, and remediation in the loan.
Learn more about EPA Lead-Safe Certification
8. Role of the FHA 203(k) Consultant
For Standard 203(k) loans (and optionally for Limited), an FHA-approved consultant:
- Inspects the property and creates a repair list.
- Verifies that bids are reasonable.
- Monitors work and approves draw payments.
- Reviews scope changes during the project.
Consultant fees are usually $750–$2,000, depending on project size, and can be financed into your loan.
Credit and Eligibility Requirements
- Credit Score: Minimum 580 with 3.5% down (or 500–579 with 10% down). NH Housing requires at least 620.
- Primary Residence: You must live in the home.
- Timelines: Typically 3 months for Limited, 9 months for Standard.
- FHA Mortgage Insurance: Both upfront and monthly insurance apply.
- Minimum Property Standards: Completed home must meet FHA requirements.
Ready to Start Your Renovation Journey?
With the right preparation and support, a 203(k) FHA Renovation Loan can turn a fixer-upper into your dream home. If you’d like help exploring options or have questions about which program is right for you, I’m here to guide you every step of the way.
📥 Download the Free FHA 203(k) Guide (PDF)
📞 Call or text Renee Duval at 603-345-5644 to get started.
Helpful Links:
We also do conventional renovation loans!
While this blog was written to describe the FHA Renovation Loan, Bookend Lending LLC offers conventional, VA and RD renovation loans. Your answers are just a question away – let us know if you want more info on any other renovation option!