An FHA 203(k) Mortgage is a mortgage and home improvement loan all in one. If you qualify for a traditional FHA loan, you may be able to buy or refinance a property that needs renovation, repair or remodeling and easily finance both the purchase and the improvements in one easy step with a low 3.5% down payment. When a homebuyer wants to purchase a house in need of repair or modernization, the homebuyer usually has to obtain financing first to purchase the dwelling; additional financing to do the rehabilitation construction; and a permanent mortgage when the work is completed to pay off the interim loans with a permanent mortgage. Often the interim financing (the acquisition and construction loans) involves relatively high interest rates and short amortization periods. The Section 203(k) program was designed to address this situation. The borrower can get just one mortgage loan, at a long-term fixed (or adjustable) rate, to finance both the acquisition and the rehabilitation of the property.

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This program can be used to accomplish rehabilitation and/or improvement of an existing one-to-four unit dwelling in one of three ways:

  • To purchase a property on another site, move it onto a new foundation on the mortgaged property¬†and rehabilitate it.
  • To purchase a property and the land on which the property is located and rehabilitate it.
  • To refinance existing loan and rehabilitate a dwelling
  • Paint the house or add siding
  • Add a porch, deck or patio
  • Replace a leaky roof
  • Put in new flooring, carpeting or tiling
  • Conserve energy with new windows or appliances of your choosing

Some Eligible Repairs include:

  • Remodel the kitchen or bath
  • Renovate or add a room
  • Update wiring, plumbing or heating

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