FHA 203k Rehabilitation

Opportunity for Property Financing, Rehabilitation, and Improvement

The FHA 203k loan offers buyers the opportunity to purchase a property and rehabilitate it in one mortgage. Borrowers select from two 203k options – “standard” and “streamlined.”

The “standard” 203k loan offers improvements with a minimum cost of $5,000 and a maximum of whichever comes first: the area’s FHA mortgage limit (in SLO County, $561,200) or 110% of the post-improvement appraised value. The standard loan gives borrowers the ability to make structural repairs and upgrades (something which the streamline program denies). This option is used for larger construction projects (see list of eligible improvements here).

The “streamline” loan offers borrowers up to $35,000 to achieve home repairs, improvements, and modernizations. The upgrades cannot be “structural.” Eligible projects include kitchen and bathroom upgrades, and anything that improves the homes’ energy efficiency. This option is used for smaller “rehabilitations” (see list of eligible improvements here).

Obtaining a 203k Loan

1) Find a builder / contractor that is approved by the lender;
2) Submit a detailed proposal of the work to be completed, including a complete cost estimate;
3) Provide a home appraisal that includes the post-improvement home value.

[Note: The borrower himself / herself is able to do the construction work on the FHA 203k loan providing they are qualified to do the work, and complete it in a timely and workmanlike manner.]

Rehabilitation Guidelines

1) Begin within 30 days of funding;
2) Not cease for more than 30 days;
3) Be completed within 6 months. The streamline loan requires that the property must be habitable 30 days after closing, while the “full” 203k loan requires that the buyer not be displaced for more than 30 days during any point in the construction process.


Similar to other FHA loan products, down payment options run as low as 3.5%, and borrowers must pay both an annual mortgage insurance payment (MIP) and an upfront insurance premium (UFMIP).

The interest paid on the FHA 203k loan is tax deductible, so the buyer is able to purchase a home improve it, raise its market value – and all while receiving a tax deduction.

To obtain financing under the FHA 203k program, the borrower must meet certain standards for appraisal, documentation, timeliness, workmanship, and construction. For our experienced loan officers, the process is no more complicated than any “conventional loan”, and it offers an excellent opportunity for buyers to rehabilitate their property!

Step 1. Get Pre-Approved.

How Does Pre-Approval Work?

Getting pre-approved is as easy as 1-2-3!

1. Create an Account

Creating an account is fast, easy, secure and FREE! Your account enables you to easily modify your loan application and view the status of your loan anytime day or night.

2. Submit Information

When you register for a Loan Center account, you can submit a loan application online and the sensitive information that you provide will be transmitted securely.

3. Get Pre-Approved

Kick your feet up while we crunch the numbers. Pre-approval can be done very quickly if you provide a complete and accurate loan application and supporting documentation.

You have questions? We have answers.
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