What Is an FHA 203(k) Loan?

An FHA 203(k) loan is a type of government-insured mortgage that allows the borrower to take out one loan for two purposes: home purchase and home renovation. An FHA 203(k) loan is wrapped around rehabilitation or repairs to a home that will become the mortgagor’s primary residence.

An FHA 203(k) is effectively an FHA construction loan.

KEY TAKEAWAYS

·        An FHA 203(k) loan is a government-backed mortgage that is essentially a construction loan that finances both the purchase and repairs of a home.

·        These loans are intended to support homeownership among lower-income households, allowing them to improve and update older properties as their primary residence.

·        The FHA offers different varieties of the 203(k) loan depending on the extent.