Why use the standard 203K?
The FHA Standard 203k loan allows buyers and homeowners to finance major renovations and structural repairs within one mortgage.
Use the Standard 203(k) when:
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Repairs exceed $75,000
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Structural work is required
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Architectural or engineering plans are needed
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Major renovation or reconstruction is planned
An FHA Fee Consultant is required for all Standard 203(k) loans.
An FHA fee consultant must be hired..
The fee consultant helps you determine if your project is feasible and if your contractor’s quote is realistic.
The fee consultant can also advise you if additional repairs are likely to be required by the FHA appraiser.
Find a local fee consultant
Role of the FHA Fee Consultant
The FHA Fee Consultant helps ensure the project is feasible, properly documented, and completed according to FHA standards.
The consultant will:
Inspect the Property
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Check for rodents, termites, dry rot, or infestation
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Identify any health or safety hazards
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Evaluate structural, heating, plumbing, electrical, and roofing systems
Prepare Property Condition Report
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Document current property condition
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Identify deficiencies in structure, roof, plumbing, heating, and electrical systems
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Ensure the project meets HUD Minimum Property Requirements
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Your contractor must include repairs for any required corrections
Prepare Work Write-Up and Cost Estimate
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Confirm scope of work is complete and realistic
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Verify costs and project feasibility
Inspect Repairs During Construction
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Perform draw inspections during the renovation
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Confirm completion and quality of workmanship
Eligible Properties: 1-4 family primary residence
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1–4 unit owner-occupied primary residence
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HUD-owned properties (single-family only) allowed
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Property must have Certificate of Occupancy for at least 1 year
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Manufactured homes are not eligible
203K can be used for purchase or refinance
FHA 203K for Purchase
The FHA 203(k) combines purchase and renovation into one loan.
Loan Calculation
Sales Price + Rehab Account = Acquisition Cost
Rehab Account includes:
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Cost of repairs
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10–15% contingency reserve
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Consultant and inspection fees
Down Payment
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3.5% based on total Acquisition Cost
At Closing
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Seller receives payment
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Ownership transfers to buyer
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Renovation funds become available for project completion
Refinance Transactions
Homeowners can refinance and finance renovation in one loan.
Loan Calculation
Payoff of existing mortgage(s) + Rehab Account + Financed Closing Costs = New Loan Amount
Rehab Account includes:
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Cost of repairs
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10–15% contingency reserve
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Fees
Key Benefit
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Borrow up to 100% of the completed (after-repair) appraised value
At Closing
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Existing mortgage(s) paid off
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Renovation funds released for project completion
Eligible Improvements
The Standard 203(k) supports major renovation and structural improvements.
Repair or Replace
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Roof and gutters
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Heating and air conditioning systems
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Plumbing and electrical systems
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Flooring
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Appliances
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Windows, doors, and siding
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Septic systems
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Wells
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Interior and exterior paint
Other Repairs you can do with a standard 203k loan
The Standard 203(k) may also be used for:
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Weatherization (insulation, storm windows/doors, weather stripping)
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Accessibility improvements for persons with disabilities
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Lead-based paint stabilization or abatement
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Basement finishing and remodeling (non-structural)
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Basement waterproofing
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Major rehabilitation or remodeling (including moving load-bearing walls)
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Room additions and structural expansion
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Structural damage repair
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Repairs requiring architectural drawings or engineering plans
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Repair or removal of in-ground swimming pools
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Smoke detector installation
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Detached garages when no attached garage exists
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Conversion to reduce number of units
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Site improvements such as landscaping, patios, decks, and terraces
(Must add equal value or be required to meet minimum property standards)