| Borrower
Takes Preliminary Steps and Applies for Mortgage |
| Borrower applies for a mortgage with a lender approved by the Federal Housing Administration (FHA) to process 203(k) Rehabilitation Mortgages. |
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Standard 203(k): This type of 203(k) case is for remodeling and repairs with a minimum cost of $5,000. A 203(k) consultant is required and is selected by the lender from the FHA 203(k) Consultant Roster. The 203(k) Consultant inspects the property, prepares the Work Write Up and Cost Estimate, provides the Architectural Exhibits, and performs a Feasibility Study, if required. |
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Limited 203(k): This type of 203(k) is for minor remodeling and non-structural repairs that do not exceed $35,000 or $50,000 if the property is located in a Qualified Opportunity Zone (there is no minimum). Using a 203(k) Consultant is optional. Borrower submits a Work Plan and contractor’s written proposal and Cost Estimate to the lender. If work is being performed by the borrower, a Rehabilitation (Self-Help) Agreement is entered into. |
| Notes: The sales contract must include provisions for 203(k) financing and improvements. 203k Calculator is available on the FHA Connection and HUD.GOV websites for calculating required amounts. |
