203k Loans
A 203k loan is a type of FHA loan that allows buyers to finance both the purchase of a home and certain renovations into one loan.
This option is often used by buyers who are open to homes that need repairs or updates.
How 203k Loans Work
With a 203k loan, the cost of approved renovations is added to the loan amount.
Instead of taking out separate loans for the home and repairs, buyers combine them into a single mortgage with one monthly payment.
Types of Renovations That May Qualify
203k loans are designed for repairs that improve the safety, livability, or functionality of a home.
These can include structural repairs, system upgrades, or necessary improvements. Cosmetic updates alone may not always qualify.
Why Buyers Consider 203k Loans
Some buyers use 203k loans to:
Purchase homes that need work
Expand their home search beyond move in ready properties
Improve a home over time rather than all at once
This option can open up opportunities in competitive markets.
Planning and Timing Considerations
203k loans often involve additional steps compared to standard mortgages.
Renovation plans, timelines, and contractor involvement are typically reviewed as part of the process. This can mean more coordination and patience.
Who 203k Loans May Be Best For
203k loans may be a good fit for buyers who are comfortable with renovation planning and want to improve a home after purchase.
They are often used by buyers who plan to live in the home, not investors or flippers.
Is a 203k Loan Right for You
A 203k loan can be helpful if you are flexible, prepared for a longer process, and interested in transforming a home rather than buying one that is fully updated.
Comparing this option with other loan types can help you decide what fits your goals.
What Comes Next
If you are considering a 203k loan, understanding FHA loans and how pre approval works can help you prepare.
You can explore related guides in the Learn Hub or try the Home Readiness Check™ to see how prepared you are for buying a home.