FHA 203(k) loans: What they are and how they work

2 hours ago 1

Mia Taylor

Mon, January 26, 2026 astatine 9:49 AM CST 9 min read

FHA 203(k) loans supply backing to concern some a home’s acquisition and the outgo of repairing it.
This benignant of loan, which you tin get from an FHA-approved lender, is reserved for borrowers who mean to unrecorded successful the home, not house-flippers oregon investors.
There are 2 types of 203(k) rehab loans: limited, for repairs little than $75,000, and standard, for much costly projects.

If you privation to bargain oregon refinance a location that needs renovations, the FHA 203(k) rehab indebtedness whitethorn beryllium a bully option. Also known arsenic a Section 203(k) loan, this benignant of financing lets you rotation some your owe and remodeling costs into a azygous loan. Like different FHA loans, a 203(K) indebtedness is insured by the Federal Housing Administration and offered by FHA-approved owe lenders.

In immoderate cases, you tin besides concern up to six months of owe payments if you request to unrecorded elsewhere during renovations. Borrowers besides wage FHA owe insurance.

There are 2 types of FHA 203(k) loans: constricted 203(k) and the much fashionable modular 203(k). Here’s an overview:

Type of loan	Designed for	Minimum outgo requirement	Maximum indebtedness amount
Limited oregon streamline 203(k) loan	Minor improvements and non-structural projects (like coating oregon installing caller flooring)	None	$75,000
Standard 203(k) loan	More extended jobs, including large structural enactment (like gathering an addition)	$5,000	Depends connected the county’s FHA indebtedness limits

A 203(k) renovation indebtedness tin beryllium a 15- oregon 30-year fixed- oregon adjustable-rate mortgage. The magnitude you tin get depends connected criteria specified arsenic your recognition standing and income. The full magnitude borrowed done 203(k) loans indispensable beryllium wrong FHA indebtedness limits for the country successful which the location is located. For 2026, the FHA bounds for low-cost areas is $541,287 for single-family homes; those surviving successful high-cost areas whitethorn get up to $1,249,125.

Generally, the astir you tin get for the indebtedness is the lowest of the following:

The FHA’s maximum indebtedness bounds for the region wherever the spot is located
The home’s pre-renovation worth positive betterment costs
The home’s after-renovation value

A modular 203(k) indebtedness tin screen galore large projects, including:

Converting a spot from 1 portion to up to 4 units, oregon the reverse
Foundation repairs
Adding oregon repairing a deck, patio oregon porch
Adding oregon remodeling a garage
Adding a fence
Adding accessibility features for radical surviving with disabilities
Installing appliances specified arsenic a caller refrigerator, cooktop oregon oven
Remediating wellness and information hazards, specified arsenic pb paint
Plumbing, HVAC oregon electrical upgrades oregon replacement