203k Rehab

203K Rehab is the name used for fixer-upper loan. You can purchase a home needing work and the bank pays for it.


  • The purchase price of a house is $100,000.
  • You estimate it needs $10,000 in work.
  • Your total loan amount is $110,000 less your down payment.

203Ks require a 3.5% down payment of the total process or $100 if a HUD $100 Down Home.

The lowest amount is $5,000 and $50,000 the most.

Loan amount combinations can be used in variations. If your preapproval is for $100,000, you can

  • Buy house for $95,000 add $5,000 in work.
  • Buy house for $80,000 add $20,000 in work.
  • Buy house for $50,000 add $50,000 in work.

Work can be almost anything minus major structural work, an extra room, or luxury items, swimming pool.

Here are typically allowed items:

  • Repair or replace roofs, gutters and downspouts; heating and air conditioning, plumbing and electrical systems; floors; decks, patios, porches; septic or wells
  • Kitchen Remodeling.
  • Basement finishing, remodeling, and waterproofing.
  • Painting, outside or inside.
  • Storm windows and doors, insulation, and weather stripping;
  • Appliances, refrigerators, washers/dryers, and so on.
  • Lead-based paint clean up
  • Window and door replacements
  • Exterior wall re-siding.

Work has to be done by a licensed contractor. Sometimes, a general contractor or a 203K consultant is required for large jobs. Do-it-yourselves is not allowed.

Your main job is to select the house, identify the work needed, and get a licensed contractor to provide a written estimate. Your realtor negotiates the contract, helps you identify what work makes sense and helps find a contractor. The Mortgage Broker puts the loan package together and coordinates with the contractors and you to get all the required paperwork.

203K Rehab Loans take up to 4 weeks longer than a regular FHA loan. This is mostly due to finding the right contractor and extra paperwork.

Work begins once you close the loan and own the house. The lender pays the contractor about 40% to start.

The remainder after the work is finished and an inspection is done. There are 2 appraisals: the first assess the value and identifies the work to be done. The 2nd after the work is completed to verify it was done properly.

203K is a popular program that allows you to get a new house smell by making improvements to fit your lifestyle.


Get a licensed contractor to give a written estimate for repair work. Try for 203K Contractor or on who accepts 203K Rehab work. Important that the contractor is experienced or know 203 K Rehabs.

What is Hard About it: Needs 2 separate inspections ($$). Takes about 2-3 weeks longer to close. Lots more paperwork.

Most anything can be included in the loan, except for a pool or room additions.

Most lenders offer 203K Loans. But few do them well. My first loan closing was a 203K – I remember it well.

For more info:

Chris Luis, My Favorite Mortgage Broker

Call or text me  941-219-4389

Write me: chris@chrisluis.com

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