What is FHA 203K?

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The FHA 203(k) Renovation Program (FULL and STREAMLINE) allows for a qualified owner-occupied buyer to purchase or refinance a 1-4 unit family home in “As-Is” condition. The program lends purchase money and repair money in one mortgage, allowing a buyer to close “As-Is”, with all repairs being completed after closing. With bank owned properties, short sale properties, and distressed properties covering over 80% of the market, many sellers do not have funds to repair or maintain the homes they are selling (roof, HVAC, plumbing, electrical, flooring, appliances, painting, landscaping, etc.), quickly making the FHA 203K program is the fastest growing mortgage product in the country!

Quick Points:

  • Any owner-occupied buyer is eligible provided they have a 640 credit score, no late payments or collections in the last 24 months and meet normal FHA guidelines. There are no income restrictions or special qualifications needed.

  • The program can be used for “needed repairs” or “cosmetic repairs”. It can be used for room additions, bathrooms, or even adding a garage! Appraisal will be based on the “after-improved value”.

  • The property closes “as-is” and all repair funds are placed into an escrow account at closing with the lender.

  • All repairs are completed by licensed and insured contractors and the funds are released as the work is completed and inspected (1-5 draws payable to the owner and contractor).

  • Buyers with major renovations can include 1-6 payments into their loan so they don’t have to make payments and rent at the same time.

  • We have over 20 years of experience in FULL 203K lending, which has no limit to the repairs or improvements, and are one of the top originators of 203K’s in the state of Florida!

Key Steps for Homebuyers:

  • Contact us for an FHA 203K pre-approved loan amount prior to looking for a home.

  • Write a standard contract with the following items: “Buyer is using and FHA 203k Renovation Loan”, 45 day closing (60 days for major renovations that require architectural work), loan amount “To Be Determined”, maximum seller paid closing is 6% of the sales price, Inspection period is 15 days.

  • Contact us for a HUD approved 203k consultant in your area and have a list of all the desired repairs. They will inspect the property and tell you what repairs will be required and estimate the repairs for you (203k Feasibility Inspection).

  • Line up a licensed and insured general contractor to provide an estimate for the repairs. If you don’t have one, we can help you find a 203k approved contractor.

  • Loan application and appraisal are ordered after these estimates and 203k Report is completed.

Example of 203K:

Sales Price:  $150,000
Improvements: $65,000
Contingency Reserve: $6,000
 “Soft Costs” (Inspections, permits, fees, plans, etc.): $1,500
Total Acquisition Cost: $223,000
Down Payment: $7.850
Base Loan Amount: $215,150


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