FHA Rehab Loans

The Federal Housing Administration (FHA) has rehab loans through its Section 203(k) program.  This program is specifically targeted at the rehabilitation and repair of single family properties.

When a buyer wants to purchase a home that needs repair, the loan process can be complex.  It could require a loan to purchase the property, additional financing for the construction or repairs, and then a permanent mortgage once everything is complete.

The Section 203(K) program allows a buyer to get one mortgage to finance both the home purchase and the repair/rehabilitation of the property.  There are different programs based on the extent of what needs to be done.  There is a streamlined program for loans up to $35,000 and the ability to do more extensive work as well.  The mortgage amount is based on the projected value of the completed project.

Single family and up to four family properties are eligible for this program.  The program is not for luxury repairs.  Rather, it can be used for:

  • Structural improvements
  • Modernizing the home’s functionality
  • Eliminating health and safety hazards
  • Changing the appearance and eliminating obsolescence
  • Fixing or replacing plumbing, roofing, gutters, flooring
  • Landcaping improvements
  • Increasing access for the disabled
  • Increasing energy efficiency

A detailed explanation of this program can be found on the HUD Homes and Communities Site.