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A renovation mortgage could be the right loan product for you. If you're looking to purchase a home or renovate your existing home, you should consult Erin the Expert about your plans. She will be able to explain the different options available.

In this video, Erin tells us about the two types of FHA 203k renovation mortgage programs - how they are different, what they can be used for and the process for getting one.

Below are some notes, details and examples from this episode.

General guidelines

  • Can be used to
    • Purchase and repair a home that needs TLC
    • Finance the renovation of your existing home
  • 203k renovation loans are an FHA product which means 3.5% down payment (96.5% max LTV)
  • Can borrow against 110% of the after improved (end) value (see example)
  • Renovations can be up to 50% of after improved (end) value
  • Can be used to finance the cost of
    • Renovations
    • Permits
    • Inspections
    • Reserves
    • Additional closing costs.

Types of 203k Renovation Loans

  • Limited 203k
    • $35k max renovation
    • Good for roof, windows, bathrooms, kitchens
  • 203k standard
    • Projects over $35k
    • Good for comprehensive and structural repairs: additions, rebuilds, multi-room

You will need a 203k Consultant

  • Independent 3rd party
  • Reviews plans and pricing - Ensures financially feasible
  • Inspects work - Makes sure end result is safe and livable

Max Loan Amount Example

  • Value before renovations: $150,000
  • Renovation costs: $50,000
  • End value: $200,000 ($150,000 + $50,000)
  • 110% end value: $220,000 ($200,000 x 110%)
  • Max loan-to-value (LTV): 96.5% (3.5% down payment)
  • Max mortgage amount: 
    • $220,000 x 96.5%
    • $212,300
  • Minimum down payment (equity) required: $7,700
    • $220,000 x 3.5%

Additional Resources


Are you a first time home buyer?

Consider downloading our FREE homebuying guide specifically for those new to the process. It's packed with useful information, checklists and tip sheets to get you off on the right foot.


Are you ready to take the next step?

It's time to get pre-approved with Erin the Expert!