What Is An FHA 203K Loan?
Backed by the Federal Housing Administration (FHA), an FHA 203k loan is a mortgage option that finances the purchase and renovation costs of a home. If upgrades are needed to a home, an FHA 203k renovation loan can help finance that work while helping to keep costs as low as possible. These loans can be used for purchasing or refinancing, and offer lower down payment requirements and lower refinancing interest rates.
An FHA 203k loan can be used for either cosmetic or structural repairs. In order to provide solutions for nearly any situation, FHA 203k loan lenders typically offer the loan in two forms: FHA 203k Full/Standard and FHA 203k Limited.
FHA 203k Full/Standard
An FHA 203k Full/Standard mortgage option is best for modernizing older properties that need structural repairs or a major renovation. Some examples of updates with a Full/Standard FHA 203k loan include bedrooms needing to be remodeled, replacement or repairs to plumbing, roofing and floors, or improving function, appearance, landscaping, energy conservation, health, safety and disabled accessibility.
FHA 203k Limited
The FHA 203k Limited loan is designed to handle smaller projects and cosmetic upgrades that typically have a quicker turnaround. The cost of renovations can be up to $35,000 and can cover minor changes such as:
- Fixing or replacing roofs, gutters, flooring, decks, patios, windows and other similar options
- Update existing HVAC, plumbing or electrical systems
- Remodel or finish a basement or kitchen that doesn’t require structural work
- Painting and weatherizing
- Improving disabled accessibility
For a more affordable renovation, talk to a PrimeLending loan officer about an FHA 203k renovation loan.