fha 203k program explained for buyers planning renovations

What it is and who it serves

The fha 203k program wraps a home purchase or refinance and the cost of approved repairs into a single, government-backed mortgage. It’s designed for primary residences, helping buyers tackle fixer-uppers and owners modernize aging homes without juggling multiple loans.

There are two paths: a Limited option for smaller, non-structural projects, and a Standard option for larger jobs that may involve structural changes and a HUD consultant.

How the process works

Lenders review your income, credit, and proposed scope of work. You gather licensed contractor bids; an appraiser values the property based on the after-improved condition. At closing, repair funds go into an escrow account and are released in draws as milestones are met.

• Get preapproved and define your renovation plan.
• Obtain detailed bids and timelines.
• Complete appraisal and underwriting.
• Close; renovations begin under draw inspections.
• Finish work; loan services into regular payments.

Expect mortgage insurance and a slightly longer timeline. Minimum down payments can be modest, but luxury items are excluded, and work must be completed by qualified pros within lender-approved schedules.