203(k) Rehabilitation Mortgage Insurance Program
Section 203(k) insures mortgages covering the purchase or refinancing and rehabilitation of a home that is at least a year old. A portion of the loan proceeds are used to pay the seller, or, if a refinance, to pay off the existing mortgage, and the remaining funds are placed in an escrow account and released when the rehabilitation is completed. Section 203(k) offers:
- a solution that helps both borrowers and lenders, insuring a single, long term, fixed or adjustable-rate loan that covers the acquisition and rehabilitation of a property.
- affordability and flexibility of FHA-insured financing.
- the lender protection by allowing them to have the loan insured prior to completion of rehabilitation, even before the condition and value of the property may offer adequate security.
- the lender the opportunity to help address climate change by insuring the financing of cost-effective energy efficient improvements.
Types of Programs
Standard 203(k) For major rehabilitation or repairs. |
Limited 203(k) For less expensive repairs/improvements. |
NOTE: For housing rehabilitation activities that do not also require buying or refinancing the property, borrowers may also consider HUD's Title 1 Property Improvement Loan Program.
Acceptable Property Types:
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Eligible Supplemental Programs and Products
A 203(k) Mortgage may be used in conjunction with:
Eligible Improvements
Include but are not limited to:
- Eliminating health and safety hazards that would violate FHA's MPR.
- Reconstructing a structure that has been or will be demolished provided the complete existing foundation system is not affected and will still be used.
- Repairing, reconstructing, or elevating an existing foundation where the structure will not be demolished.
- Making structural alterations such as the repair or replacement of structural damage, additions to the Structure, and finished attics and/or basements.
- Rehabilitating, improving, or constructing a garage.
- Repairing/replacing plumbing, heating, air conditioning, and electrical systems
- Making changes for improved functions and modernization.
- Repairing or installing new roofing, siding, gutters, and downspouts.
- Installing or repairing fences, walkways, driveways, exterior decks, patios, and porches
- Installing a new refrigerator, cooktop, oven, dishwasher, built-in microwave oven, and washer/dryer.
- Repairing or removing an in-ground swimming pool.
- Creating accessibility for persons with disabilities.
Resources