Posted by: Larry Stevens | June 13, 2012

New Article: What Does the 203k Loan Cover?

New Article: What Does the 203k Loan Cover?

A new article has been posted on our blog by Dan Moyle:

What Does the 203k Loan Cover?



what does the 203k loan coverIf you’ve heard of the 203k loan, then you may know the basics about this home improvement loan. You may already know that the 203k allows you to buy a home and have renovations done, all in one mortgage. You might also understand that current homeowners can refinance and remodel with the 203k. But do you know what the 203k loan covers?

The list of ineligible home improvements is much shorter than what’s covered. You can’t finance luxury items like a pool, spa, tennis courts or a barbecue pit with the 203k. With that said, here’s a look at some of the remodeling projects covered by this renovation financing.

  • Repair or replace a roof
  • Install, replace or repair gutters and downspouts
  • Replace, repair or upgrade your HVAC system
  • Repair or replace plumbing
  • Install, repair or replace electrical systems
  • Kitchen remodeling (including the purchase and installation of appliances)
  • Bathroom remodeling
  • Full interior painting
  • Total exterior painting
  • Repair or replace septic system and/or well
  • Disability access (wheelchair ramp, elevator, widen doorways)
  • Build, repair or replace deck, patio or porch
  • Basement waterproofing and finishing
  • Abatement/stabilization of lead-based pain hazards
  • Replace old windows
  • Room additions
  • Finish an attic
  • Add a second story to your home
  • Replace a termite-damaged sill plate (a water-damaged sill platealso)
  • Possible landscaping items* such as
    • correction of grading & drainage problems
    • tree removal
    • repair a driveway and sidewalks

Let’s take a look at the maximum mortgage amount for the 203k in different situations.


Based on the lesser of:

  1. The existing mortgage balance before rehabilitation, plus the estimated cost of rehabilitation and allowable closing costs or
  2. The lesser of the As‐Is value plus rehabilitation costs or 110 percent of the After‐Improved value multiplied by 97.75%.


The maximum mortgage amount is based on the lesser of (1) or (2) of the below multiplied by 96.5%.

  1. The As‐is value or the purchase price of the property before rehabilitation, whichever is less, plus the estimated cost of rehabilitation or
  2. 110 percent of the After‐Improved value of the property.

Learn all about the FHA 203k with a free eBook that explains the process from inspection to closing and on into the remodeling. You’ll also learn the difference between a Full 203k and the 203k Streamline options. Download “The FHA 203k Survival Guide” at the button below.

*these landscaping items will be financed with the Full 203k and must be a health & safety issue

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