FHA 203(k) Renovation Loan

The FHA 203(k) Renovation Loan is a powerful financing option that allows you to purchase or refinance a home and finance renovation costs into one single mortgage. Instead of juggling multiple loans or paying out of pocket, everything is rolled into one simple monthly payment.

Whether you’re buying a fixer-upper, upgrading an older home, or refinancing to fund renovations, a 203(k) loan can help turn a “needs work” property into your dream home.

HA 203k loan Indiana – renovate your home with one mortgage

What Is an FHA 203(k) Loan?

An FHA 203(k) loan is a government-backed mortgage insured by the Federal Housing Administration that lets you:

  • Buy a home and renovate it at the same time
  • Refinance your current home and include renovation costs
  • Base your loan on the after-improved value of the home
  • Finance repairs, upgrades, and improvements into one loan

You make one payment, one loan, one closing — with renovation funds held in escrow and released as work is completed.

 

Two Types of 203(k) Loans

There are two versions of the 203(k) program, depending on how extensive your renovation is.

Limited 203(k) (Formerly “Streamline”)

Best for smaller, non-structural projects.

Limited 203(k) Highlights:

  • Up to $75,000 in renovation costs
  • No structural changes allowed
  • No HUD consultant required
  • Repairs must be completed within 9 months
  • If the home becomes uninhabitable, up to 30 days is allowed (previously 15 days)
  • Faster and simpler than the Standard 203(k)

Common Uses:

  • Flooring
  • Paint
  • Roof replacement
  • HVAC
  • Kitchen or bathroom updates (no layout changes)
  • Appliances
  • Windows and doors

Standard 203(k)

Best for larger projects and structural renovations.

Standard 203(k) Highlights:

  • No official maximum renovation limit (based on loan limits and appraised value)
  • Structural changes allowed
  • Room additions and major remodels permitted
  • Requires a HUD-approved 203(k) consultant
  • Up to 12 months to complete construction
  • May allow up to 12 months of mortgage payments to be financed if the home can’t be occupied

Common Uses:

  • Room additions
  • Structural repairs
  • Full kitchen or bath remodels
  • Basement finishing
  • Foundation work
  • Major layout changes
  • Rebuilding after damage

 

2024 FHA 203(k) Program Updates

HUD announced major updates to the 203(k) program that became effective November 4, 2024 (Mortgagee Letter 2024-13).

These changes were designed to make renovation loans more flexible and easier to use.

Key Updates Include:

  • Limited 203(k) maximum increased to $75,000
  • Limited 203(k) completion timeline extended to 9 months
  • Limited 203(k) uninhabitable period increased to 30 days
  • Standard 203(k) allows up to 12 months for completion
  • Standard 203(k) may finance up to 12 months of mortgage payments
  • Updated consultant fee structure
  • Improved processing and documentation standards

I’ll walk you through how these updates apply to your specific property and renovation plan.

 

What Can Be Financed with a 203(k) Loan?

203(k) loans can cover a wide range of improvements, including:

  • Structural repairs
  • Roofing, siding, and gutters
  • HVAC systems
  • Plumbing and electrical
  • Kitchens and bathrooms
  • Flooring and paint
  • Accessibility improvements
  • Energy-efficient upgrades
  • Appliance replacement
  • Lead-based paint remediation

Luxury items such as pools, outdoor kitchens, and tennis courts are not allowed.

 

Down Payment and Credit Requirements

Because this is an FHA loan, guidelines are often more flexible than conventional renovation loans.

Typical Requirements:

  • Minimum down payment: 3.5%
  • Credit scores as low as 580 may qualify
  • Higher scores may qualify with stronger terms
  • Stable income and employment history required
  • Debt-to-income ratios must meet FHA guidelines

Every file is different, so I’ll review your full profile and match you with the best option available.

 

How the FHA 203(k) Process Works

Here’s the simple version of how a renovation loan works:

  1. We review the property and your renovation goals
  2. You choose the Limited or Standard 203(k)
  3. Contractor bids are collected
  4. If required, a consultant prepares the work write-up
  5. The home is appraised based on the after-improved value
  6. We finalize your loan
  7. Renovation funds are placed in escrow
  8. Funds are released in draws as work is completed

I guide you through each step so nothing feels overwhelming.

 

Why Work With Me

Renovation loans are more complex than standard mortgages. Experience matters.

When you work with me, you get:

  • Access to over 280 lenders through NEXA Mortgage
  • Extensive experience with renovation financing
  • Clear communication and regular updates
  • Help coordinate contractors and consultants
  • A hands-on approach from application to final draw

My goal is to make the renovation process feel manageable and exciting — not stressful.

 

Is an FHA 203(k) Loan Right for You?

A 203(k) loan may be a great fit if you:

  • Found a home that needs work
  • Want to customize a property
  • Are priced out of move-in-ready homes
  • Want to refinance and renovate
  • Are you comfortable managing a renovation timeline

If you’re unsure, we can talk through your options and compare them with other renovation or construction loans.

Ready to Get Started?

Thinking about buying or renovating a fixer-upper?

Send me the property address and a rough wish list — even if it’s messy. I’ll help you determine:

  • Which version of the 203(k) fits
  • Estimated payment
  • Expected timeline
  • Next steps

You don’t have to figure this out alone. I’m here to help you turn a house with potential into a home you love.

Start Your Application