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FHA 203k

203k Loans Basics

The Federal Housing Administration’s 203k loan program can help you buy and renovate a home at the same time.

[Updated: Jun 09, 2021 ] Nov 01, 2019 by Aly J. Yale
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Type of Loan Limited 203k Standard 203k
Loan limits Up to $35,000 Minimum: $5,000 Maximum: 110% of the after-repair value of the home, up to the FHA limits for your county
Property condition Must be habitable during renovations Does not need to be habitable during renovations
Eligible renovations Minor repairs and renovations, no structural repairs Any repairs, including major repairs, rehabilitation, and structural changes; health and safety issues, as well as building code violations, must be addressed first
Payments 50% up front, 50% after project has concluded Payments handled by a HUD consultant
Occupancy Must move in with 60 days Must move in within six months
Reserves No reserves required Requires 10% to 20% of the rehab costs be set aside in case of project changes
HUD involvement Does not require HUD consultant Requires HUD consultant
Other differences No third-party inspection required if repairs are less than $15,000 More paperwork, includes additional fees for architecture and engineering consulting, requires inspection
FHA 203k qualifying factor Requirement
Credit score 500 (though it varies by lender)
Down payment 3.5% (with 580 credit score or higher) 10% (with credit score between 500 and 579)
Front-end debt-to-income ratio (projected housing costs only) 31%
Back-end debt-to-income ratio (current debts plus expected housing costs) 43%
Property One- to four-bedroom property or condo, some mixed-use properties, completed for at least one year
Purchase price Price plus estimated repair costs must fall under the FHA limit for the area