An FHA 203(k) loan combines the price of a home and the cost of repairs or renovations in one mortgage, with as little as 3.5% down. The Limited 203(k) covers non-structural work up to $75,000; the Standard 203(k) covers larger projects, including structural work, and requires a HUD consultant. It’s a way to buy a fixer-upper without separate renovation financing.
Limited vs. Standard
| Limited 203(k) | Standard 203(k) | |
|---|---|---|
| Repair budget | Up to $75,000 | At least $5,000, up to the FHA loan limit |
| Structural work | Not allowed | Allowed |
| HUD consultant | Not required | Required |
| Typical projects | Kitchens, baths, roof, HVAC, flooring, paint | Additions, major rehab, foundation work |
How the loan amount works
The loan is based on the lower of the price plus renovation costs, or a percentage of the home’s expected value after the work, which the appraiser estimates from the plans. It must also fit under the FHA loan limit for your county. Renovation funds go into an escrow account and are paid to contractors as work is completed.
Try it: FHA loan limitsCheck the FHA limit for your county to see how much purchase and renovation you can finance.Things to know
- You must live in the home; it’s not for investors.
- Work is done by licensed contractors, not usually by you.
- Expect a longer closing (often 45 to 60 days) and more paperwork.
- A contingency reserve is often built in for cost overruns.
- FHA mortgage insurance applies; see PMI and FHA insurance.
Alternatives
With good credit, a conventional renovation loan may cost less; see conventional renovation loans. Compare the monthly cost with the mortgage payment calculator, and see how much leverage you have on a fixer-upper’s price with the negotiation room tool.
Common questions
How much can I borrow for repairs with a 203(k)?
Up to $75,000 with a Limited 203(k); a Standard 203(k) has no set repair cap beyond the FHA loan limit and value rules.
Can I do the work myself with a 203(k)?
Generally no; licensed contractors do the work, paid from an escrow account as it’s completed.
Can investors use a 203(k)?
No. You must live in the home.
Updated October 2026. Educational content. OfferBacked is not currently a lender and doesn’t issue pre-approvals or loans.