What is an FHA 203K loan?

An FHA 203K loan can be used to not only purchase a home but finance the improvements to the home as well. They can also be used for just the home improvements but you may want to research other options if you are purchasing a home as well. These loans are guaranteed by the FHA which means lenders take less risk when financing the loan and allows the for an easier approval process.


When you find a home in a great location and good bones, it may need some repairs in order make it livable. The Federal Housing Authority makes it possible for these homes to be purchased when otherwise they may stay vacant for quite some time.

Things to Consider

As the repairs are being made to your home, you will have to arrange for temporary housing while the work is being completed.It is possible to get some funding to help cover the cost of the housing for up to six months. It is very important that you are working with a legitimate contractor to get the work done as you are only allotted six months to get the renovation complete.

The FHA 203K loan is typically used for one to four unit properties but not for investors. It can be used for certain projects in condo and townhomes as well. It’s also important to note that you don’t necessarily have to have perfect credit because the FHA is guaranteeing the loan. But you do want to make your debt to income ratio is manageable in order to qualify.

Finer Details

The interest rate for this loan just as any other will depend on the market as well as your credit. These types of loans usually have a slightly higher interest rate than a standard home loan but it’s also easier to get approved for these loans. The lenders also need to track the progress of the project so they are doing more work than you would find in a standard loan. It is important when determining your financing options to do your research and discuss options with more than one lender to make sure you figure out the best option for you and your situation.

Making major improvements to your home can be very rewarding but with a FHA 203K loan that comes with the price of a hefty amount of paperwork. Because the process needs to be tracked diligently, it’s important to consider when deciding if this is the loan for you.

You will also need to patient with this type of process as the FHA and lender will have to give you approval on your improvements before they are funded and you aren’t granted complete freedom with what needs to be fixed and when.

Contact Me Today!

Buying a home is typically the biggest purchase one can make in their life and making sure it’s fixed up an livable can be overwhelming.  We want to make sure you have all the tools needed to make the process as easy as possible so reach out to JZ Mortgage Services so we can help out today!