203k FAQ's

Here are some commonly asked
questions about the FHA 203k
Home Purchase and Renovation
Program:

What are the two types of 203k loans?

The FHA has two types of programs available:

1. The Standard 203k covers relatively minor (though exceeding $5000 in cost) to virtual reconstruction. For example, provided that the existing foundation system remains in place, the Standard 203k allows for the complete rehabilitation of the property of any size up to 4-units.

2. The Streamline 203k program allows homebuyers (or homeowners) to finance up to an additional $35,000 into their mortgage to improve or upgrade their home. Eligibility of improvements are limited compared to the Standard program. Click here for a list.

What is the minimum amount of rehabilitation required?

FHA requires you to borrow at least $5,000 for repairs under the Standard program. There is no minimum under the Streamline 203(k) program.

How much can I borrow?

The FHA 203k program follows standard FHA loan limits that are relative to housing costs in a given area. Current limits can vary from $271,000 in areas where home values are lower, to $729,750 in higher priced areas. To determine the current limits in your area, visit FHA Mortgage Limits.

Are there certain repairs required?

Yes. FHA requires you to meet current building standards for energy efficiency. If you are rehabilitating a home than these standards include:

·	Ventilation of crawl spaces and attics
·	There must be weather stripping on all windows and doors
·	All outward facing walls and ceilings of the home must be insulated. The air conditioning, heating and ventilation pipes and ducts must also be insulated
·	All cracks and openings from the interior to the exterior of the home must be sealed
·	Every bedroom must have a smoke detector
·	Any other items that would cause a "health and safety" issue must be addressed

What types of improvements are eligible?

The homeowner can use the 203k program to finance such items as painting, room additions, decks and other items even if the home does not need any other improvements. All health, safety and energy conservation items must be addressed prior to completing general improvements.

What types of improvements are NOT eligible?

Luxury items such as BBQ pits, bathhouses, exterior hot tubs, saunas, spas and whirlpool baths, swimming pools, tennis courts, TV antennas and satellite dishes, dumbwaiters and additions/repairs for commercial use. Further restrictions apply to the Streamline program.

Is there a certain amount of time to complete the renovation?

The work must begin within 30 days of closing the loan. The rehabilitation must be completed within the time frame established in the Agreement and cannot exceed 6 months.

Who performs the renovation work?

All work is completed by licensed and insured contractors who don't get paid until the work is signed off on by a HUD Approved Inspector.

What if I have more questions?

Please feel free to contact us or visit HUD's 203k FAQ page for additional information.

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