FHA 203k Loan

FHA 203k loans are loans from the Federal Housing Administration to help Americans renovate and make improvements on existing single-family homes. This plan can both help people moving into a home, and also improve the condition of homes that might otherwise be a blight on the neighborhood.

Choices for Borrowers

A loan to purchase a home and then another loan for improvements can be prohibitively expensive for many people. With a FHA 203k loan, borrowers can avoid paying the extra fees, expenses, and costs of having two separate loans. Loans can range from $5,000 to $35,000, and the improvements need to be completed within six months. The FHA 203k loan program is divided into two separate plans:

  • Standard FHA 203k loan - for large projects, an approved consultant is assigned to the borrower to determine if the improvements are feasible and will benefit the home and the property value. The consultant also monitors the progress of the project through to completion.
  • Streamlined FHA 203k loan - for small projects, no consultant is required, and the borrower can go straight to a certified contractor to get the project started.

Benefits for Borrowers

An FHA 203k loan is not assistance from the federal government, but rather a loan from a traditional lender that is guaranteed by the government, so there is not stigma attached to this kind of borrowing. When lending and credit are tight, eligible borrowers should take advantage of this important program.