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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.

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Limited 203(k)

For less expensive repairs/improvements.

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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

  • Single family homes.
  • Single family homes with eligible accessories dwelling units.
  • Two- to four-family units Townhomes.
  • Eligible condominium units and site condo units (improvements are limited to the unit's interior).
  • Manufactured homes titled as real estate, where the rehabilitation does not affect the structural components.
  • HUD Homes/Real-Estate Owned properties.
  • Mixed use properties that are primarily residential (at least 51%).

Eligible Improvements Include but are not limited to

  • Eliminating health and safety hazards that would violate FHA's Minimum Property Requirements (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.

Eligible Supplemental Programs and Products

A 203(k) Mortgage may be used in conjunction with:


Contact the FHA Resource Center for more 203(k) information.