FHA 203(k) Loan
An FHA-insured renovation mortgage that lets buyers or owners finance the purchase or refinance plus the cost of repairs in a single loan based on after-improved value.
Quick answer
FHA 203(k) Loan: An FHA-insured renovation mortgage that lets buyers or owners finance the purchase or refinance plus the cost of repairs in a single loan based on after-improved value. Typical cost: FHA rate + 0.25–0.5%; 1.75% upfront MIP + monthly MIP; $400–$1,000 in HUD consultant fees on Standard 203(k)..
Why it matters
Best path to financing a major renovation when you don't have equity yet. 3.5% down vs 5–20% on conventional renovation loans.
Typical cost
FHA rate + 0.25–0.5%; 1.75% upfront MIP + monthly MIP; $400–$1,000 in HUD consultant fees on Standard 203(k).
Pros
- • 3.5% down minimum
- • Based on after-improved value
- • Lower credit thresholds (580+ FICO)
- • Includes structural and energy work
Cons
- • Mortgage insurance for life of loan
- • FHA loan limits cap large projects
- • HUD consultant required on Standard version
- • 30–60 day close
Common uses
- • Buying a fixer-upper
- • Refinancing to fund a renovation without enough equity for a HELOC
Alternatives
HomeStyle (Fannie Mae)ChoiceRenovation (Freddie Mac)HELOC + first mortgage
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Frequently asked questions
- Who qualifies for an FHA 203(k)?
- Owner-occupants with 580+ FICO and steady income — investors and second homes don't qualify.
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