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Are you a homeowner looking for a rehab loan to improve your home? Are you thinking of adding an extra room, upgrading your kitchen or bathroom? Or maybe you just need to tend to a few upgrades or make some much needed repairs to your older home. Do you have little equity due to the market conditions or because you just recently purchased? If you answered YES to any of the above then you might want to consider financing your rehab project with the FHA 203k loan.

The FHA 203k rehab loan will help you finance your rehab project from minor repair work to turning your current residence into the home you’ve always dreamed about.

FHA 203K Rehab Loan vs. Conventional Cash Out & Home Equity Loans?
Most rehab loans are usually designed for investors. These loans have much higher interest rates and shorter terms. Standard Conventional (cash out) loans and Home Equity Loans are limited to the amount you can borrow and allow homeowners only to borrow up to 75% of the property value. Which these days, with values dropping homeowners may find themselves short in equity.


In comparison, the FHA 203k rehab loan is designed for a higher loan to value and can even exceed the property’s future value which means very little equity is needed. Along with that the 203k rehab loan is determined by the future value after repairs have been made instead of the property’s current value. It takes into consideration what the new value will be with the money you will be using for the rehab.

Is the FHA 203K Rehab Loan for me?

If you have enough equity in your property where you can take out enough money for your rehab at or below 80 % of what your property is currently worth then an FHA 203k probably isn’t your best option.


But … if you have recently purchased your home or have very little equity then this loan may be just what you’re looking for! As it will pay off your current mortgage as well as lend you the extra cash needed to upgrade, remodel and repair your home – All in one loan!


So homeowners don’t delay anymore! You now have an option. You can finance your rehab project even with little equity. The FHA 203K rehab loan is a reliable way to finance and a great option unlike any other. Turn your current residence into the home it can be and start enjoying your new found gem with your family and friends.


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  • Letty Harris says:

    Wow, and I thought I was the only one laying awake at night with worry about a rehab project. There has got to be a better way. My story and yours are almost identical. My GC promised that the project would be finished by 12/17/15. And I paid his progress payments on time. Well my house is still sitting there half finished. He did not do his work on time. It’s a tuff position to be in, especially when you are in the middle of a project and have to rely on others. But they continue to let you down. I am so sorry you are having this problem. But I wish you well.


  • Were In the midst of a 203k now. What a nightmare! Choose your consultant, mortgage company and gc wisely!! Do not use anyone recommended by the mortgage co, do your own homework and choose based on what you feel. We used a consultant rand gc based on the mtg co recommendation and were kinda forced to do so “it’s easier”. Were 7 weeks away from the 6 month deadline and still no baths or kitchen. Draw checks held for weeks, gc has no money to work or buy materials. It’s awful and the only one I. Jeopardy is us. Please be careful and listen to your gut feelings if you so one of these. Potentially it’s a great program but unless the parties are on board and do what they’re supposed to it’s a terrible experience to go through. Wish there were more experience stories out there. Could use a success story about now. Good luck all and happy rehabbing!!


    • 203k Mortgage Lender’s Reply:

      Hi Suzy,

      Sorry to hear about your 203k nightmare. Definitely choosing the right FHA Consultant and General Contractor is important. Recently we posted information regarding Contractors & Consultants on the 203k mortgage lender blog. The preference should always be that “ You , the Buyer/ Borrower pick out your own contractor as well as the Consultant (when needed) as you will be the one dealing with the day to day progress and issues … not the lender. So going with your gut feelings as well as some personal references is a very good idea. Suzy, you may already know this but as far as the contractor getting paid, the disbursement checks are two party checks which require the Buyer/Borrower to sign. This ultimately gives you the last word and keeps you in charge.

      Now the question is getting the checks. Due to the increased popularity of the program some lenders may be slower than others in releasing the draw checks but in those cases the lender should be more understanding of the time frame deadlines if they are the ones slowing down the process. Any contractor who has dealt with or will be working with the 203k should be aware that their check comes after the phase is complete not before, so having a contractor that has the resources to do work first and to get paid later would help. If you prefer, and have the funds available, you could consider paying the contractor or sub-contractor yourself and then reimbursing yourself when you receive the disbursement check as an alternative.

      As in any type of rehab or construction, 203k or NON-203k, there is always something that comes up and with bigger projects there will probably be bigger stories to tell.

      Best of luck to you I hope at the end of all this you enjoy your rehabbed home.


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