Back to Blog
FHA Loans
FHA 203k Renovation Mortgage: Buy a Fixer-Upper With One Loan
7 min read · 2025-08-01
The FHA 203k lets you finance a home purchase and renovation costs in a single mortgage. Here's how it works.
In a tight housing market with limited move-in-ready inventory, renovation mortgages are gaining popularity. The FHA 203k program lets you buy a home that needs work and finance both the purchase price and renovation costs into a single loan — at FHA's low down payment requirements.
Two Types of FHA 203k Loans
- Limited 203k (Streamlined): Up to $35,000 in repairs. No structural changes allowed. Faster and simpler.
- Standard 203k: Unlimited repair costs (up to FHA loan limits). Allows structural work, room additions, complete gut renovations. Requires an approved HUD consultant.
What Repairs Are Allowed
- Kitchen and bathroom remodels
- Roof replacement, HVAC systems, plumbing, electrical
- Flooring, windows, doors, siding
- Accessibility improvements
- Landscaping (Standard 203k only)
- Room additions and structural changes (Standard 203k only)
- Swimming pools are NOT eligible
How the Process Works
- 1Get pre-approved for a 203k loan
- 2Find a home and contractor — contractor must be licensed and approved
- 3Get written contractor bids for all work
- 4Lender orders appraisal based on after-improved value
- 5Close on the loan — funds go to purchase and an escrow account for repairs
- 6Contractor completes work — funds released in draws as work is completed
- 7Final inspection confirms work is complete
Your down payment is based on the total loan amount (purchase + repairs), not just the purchase price. On a $200,000 purchase + $50,000 in repairs = $250,000 loan. FHA 3.5% down = $8,750.
Ready to Compare Mortgage Rates?
Get personalized rates from top lenders in 60 seconds. No credit impact, completely free.
Compare Rates Now →