FHA 203k Basics

FHA 203k loans allow you to borrow money using only one loan for both home improvement and your home purchase. These loans can also be used just for home improvements  Although Some properties are in a good location but significant improvements need to be made.  In some cases, without those repairs, the home might not be suitable for living in and you may not be able to approve your loan.


Fund repairs and purchase: you can borrow enough to make your purchase plus enough to make the necessary improvements. Because the Federal Housing Authority (FHA) is involved provides us with a loan guarantee to move forward with a property they otherwise we may not be able to finance.

  • Temporary housing: unless you want to live in a construction zone, you’ll need funds for other housing arrangements. In certain cases, you can borrow extra to cover rent or your existing mortgage for up to six months.


  • Project overview: your project must be completed within six months. Funds are placed in an escrow account and paid out to contractors as the work is completed.

  • It’s essential to work with reputable contractors who are familiar with the 203k process.


  • Eligibility: Owner/occupants and nonprofit organizations can use FHA 203k, but not investors. The program is designed for one to four unit properties, but condo and townhome owners can use the program for interior projects.  Also, you don’t need perfect credit but you will need sufficient income to cover the payments. It’s best to have a debt to income ratio better than 31/43, but you might be able to go higher.


Loan Details

You must borrow at least $5,000, and there are maximum limits set by the FHA that vary by location.  For smaller projects, our Streamlined FHA 203k allows you to borrow less (with an easier process).  If fact, you can borrow enough to finance 110% of the home’s projected value after improvement. Appraisers will review your plans and take the future value of your home into account.

Down payment 

With a 203k loan, unlike other FHA loans, you can pay as little as 3.5% up front. But there are good reasons for making a larger down payment whenever you can.


Luxury Homes

You can’t fund luxury items through 203k, but you can make dramatic improvements.


Licensed Contractor Required  

You must use licensed contractors for all work, and it’s important that they know you’re using 203k. This might rule out certain handymen you’ve used in the past and have developed a relationship with. The 203k process is all about paperwork and following certain rules so brace yourself for less freedom than you might have imagined when remodeling your home.


Fix and Flip Investment Property

If you're an investor hoping to flip houses, there are better options, including No-Doc loan program. Click here to learn more



We are a fully approved FHA direct lender in Florida offering FHA Loans, VA Loans, USDA Loans.  We can assist you with your next home loan or refinance your current primary residence, second home, or investment property.   With a qualified and enthusiastic team of FHA professionals, our company has experienced unparalleled growth. In a time when other independent mortgage companies were struggling, we continued to grow at the annual double-digit growth pace. 



1st Florida Lending Corp

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