Finance your home purchase and renovations with ease using a 203(k) loan

Take advantage of low down payments and make your home improvement plans a reality

What is a 203(k) Loan?

With a 203(k) loan, you can purchase and renovate a home in one loan. This loan helps cover both the home’s purchase price and renovation costs, making it great for buyers with limited funds for repairs.

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203(k) Loan options

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Purchase

Fixed-rate 203(k) loan (15, 20, or 30 years)

Low down payment starting at 3.5%

Includes funds for home purchase and repairs

Renovation

Standard 203(k) (major remodeling/repairs)

Limited 203(k) (minor repairs up to $35,000)

Covers structural and cosmetic upgrades

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Do you qualify for a 203(k) Loan?

Understanding if you qualify for a 203(k) loan is the first step toward transforming a fixer-upper into your dream home.

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Property requirements

The property must be a 1–4 unit home that has been completed for at least one year. Condos may qualify for interior renovations only. The home must become your primary residence after renovation.

Credit requirements

You can qualify for a 203(k) loan with a credit score as low as 580 for a 3.5% down payment. If your score is between 500-579, you may still qualify with a 10% down payment.

Financial requirements

Maintain a debt-to-income ratio under 43% (front-end ratio of 31% for housing costs). You'll need funds for the down payment (minimum 3.5%) and closing costs (2-6% of the loan).

203(k) Loan benefits

203(k) loans offer unique advantages for homebuyers looking to renovate.

One loan, two purposes

Finance repair costs

Minimal down payment

Improve property value

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203(k) loan experts helping buyers purchase and renovate homes. Whether upgrading your fixer-upper or creating your dream space, we secure funding for both your home and renovations.

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FAQ’s

Find answers to common questions about 203(k) loan and the application process.

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What is a 203(k) loan?

A 203(k) loan is a government-backed mortgage that allows homebuyers to finance both the purchase of a home and the cost of its renovations. This loan is ideal for those looking to buy a property that needs repairs or improvements, as it provides funds for both the purchase and the necessary work.

Who is eligible for a 203(k) loan?

Eligibility for a 203(k) loan is similar to standard FHA loan eligibility, which typically requires a minimum credit score of 580, a steady income, and a manageable debt-to-income ratio. It is available to both first-time and repeat buyers who meet the standard FHA criteria.

What are the benefits of a 203(k) loan?

The main advantage of a 203(k) loan is that it allows you to purchase a home in need of repairs that you may not be able to afford otherwise. It also offers minimal down payment requirements and can be used to make a variety of renovations, including structural repairs and aesthetic upgrades.

What types of renovations can be financed with a 203(k) loan?

203(k) loans can be used to finance both major and minor repairs. This includes everything from structural repairs (like foundation work or roof replacement) to cosmetic upgrades (like painting, flooring, and kitchen remodeling). However, luxury items like swimming pools or outdoor spas cannot be financed.

How much down payment is required for a 203(k) loan?

The down payment for a 203(k) loan is typically 3.5% of the total loan amount, which includes both the purchase price and the renovation costs. This is the same as the down payment requirement for a standard FHA loan.

How does the 203(k) loan process work?

The 203(k) loan process begins with completing a loan qualifier to assess your unique situation. After that, you’ll receive options based on your scenario. You can then compare interest rates, terms, and loan offers to find the best fit for your needs. Once you choose the right offer, you’ll move forward with the application and renovation planning.

Are there different types of 203(k) loans?

Yes, there are two types of 203(k) loans:
1. Standard 203(k) Loan: For major renovations and structural repairs.
2. Limited 203(k) Loan: For smaller, non-structural repairs and cosmetic upgrades.

Are there any renovations that aren’t allowed with a 203(k) loan?

Yes. 203(k) loans do not allow luxury improvements such as swimming pools, outdoor kitchens, fire pits, tennis courts, or hot tubs. Only repairs and upgrades that improve safety, functionality, or livability are eligible.

How long does it take to close on a 203(k) loan?

The closing process for a 203(k) loan can take longer than a traditional mortgage due to the additional paperwork and renovation plans. On average, it may take 45-60 days to close.

Can I refinance my existing mortgage into a 203(k) loan?

Yes, you can use the 203(k) loan to refinance an existing home and finance both the outstanding mortgage balance and the cost of renovations. This is known as a "cash-out refinance" using the 203(k) program.

What types of properties can I buy with a 203(k) loan?

203(k) loans can be used to purchase single-family homes, multi-unit properties (up to four units), and certain approved condominiums. The property must be your primary residence, and it must meet specific FHA guidelines.