Reviewed by Jeff Shin, NMLS #1041652. Updated .

Also called: 203k loan, FHA 203k, 203(k) rehabilitation mortgage, FHA renovation loan.

Limited vs. Standard 203(k)

HUD runs two versions:

  • Limited 203(k) finances up to $75,000 of repairs and improvements for minor remodeling and non-structural work, such as a kitchen remodel, interior painting, or new flooring. A HUD-approved 203(k) consultant is optional.
  • Standard 203(k) is for major rehabilitation, including structural work and additions. Repairs must cost at least $5,000, the property’s total value has to fall within the FHA mortgage limit for the area, and a HUD-approved 203(k) consultant is part of the process.

Which properties qualify

Per HUD, the home must be at least one year old. Eligible types include single-family homes (including those with an accessory dwelling unit), two- to four-unit buildings, townhomes, eligible condominiums (with work limited to the unit interior), manufactured homes titled as real estate, HUD-owned homes, and mixed-use properties that are at least 51% residential.

How the money moves

The loan is one fixed-rate or adjustable-rate mortgage. At closing, part of it pays the seller, or the existing lender on a refinance. The rest goes into an escrow account and is paid out as the work is completed. Because FHA insures the loan before the work is done, the lender is covered even while the home is not yet in the condition that would support the full loan. FHA mortgage insurance applies as on any FHA loan.

Related terms

Related on BankPricer

Sources

Definitions on this page are summarized from the agencies that set the rules. Lenders can add stricter requirements. Checked October 8, 2026.

All mortgage glossary terms

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