You've found a house in the perfect location, but the house itself is far from what you've always dreamed of.

 Run Down House
 What do you do?


Do you keep looking?



No, you use FHA 203(k) financing and transform the house into the one in your dreams.

The 203(k) loan was designed so 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 a property. To provide funds for the rehabilitation, the mortgage amount is based on the projected value of the property with the work completed (After-Improved value), taking into account the cost of the work.

This special financing is only available for people who intend to live in the home after renovations are completed. The house in question must be at least a year old and can be a single family home, a one to four unit home or a condo/townhome (interior only).

The FHA 203(k) gives you lots of options as to what you can do with your new home. You can just give it a fresh coat of paint and some new carpeting or you can gut the interior and completely remake it to your tastes and desires. You can even raze the entire home and start from scratch as long as some part of the original foundation remains.

The FHA 203(k) comes in two "flavors" Standard and Streamline. The Streamline limits you to $35,000 in renovations and also has limits on the type of renovations you can do. The Standard is more complex, but offers you more flexibility in the allowed renovations.

With The Streamline you can repair, replace or upgrade things like the roof, the gutters, the downspouts, the HVAC systems, the plumbing systems, the electrical systems, flooring, windows and doors. Painting, re-siding, weatherization and waterproofing are also allowed. You can do minor remodeling and finishing as long as it doesn't involve any structural repairs. No appliances? Use The Streamline to purchase and install them.  Buying a home with a well and septic system and they're kaput? Use The Streamline to repair or replace them.

You can do everything listed above with The Standard plus you can make structural alterations, structural reconstruction, structural repairs, add an addition or a second story to the home just to name a few. 

The above is only a brief rundown of the FHA 203(k) loan. Please contact a knowledgeable FHA 203(k) lender for more details and with any questions regarding the FHA 203(k) loan.

HUD's FHA Lender List is available to help you find a knowledgeable FHA 203(k) lender in your area who can answer all your questions regarding both the Standard and Streamline FHA 203(k) loan.