FHA 203k: the Good vs. the Bad

Mortgage and Lending with AnnieMac Home Mortgage NMLS #38670

I am a firm believer in that the FHA 203k renovation loan creates amazing opportunities. That is not to say that it is the perfect loan for everyone in every situation. Let’s take a look at both the good and bad aspects of an FHA 203k loan and see how it weighs out.


The Good


  •        Renovations can be anything from paint to kitchen appliances to adding an addition or even adding a second level to your home
  •        3.5% down payment of the purchase price plus renovation costs
  •        Roll in all renovation and purchase costs into one low fixed interest rate
  •        Potentially gain instant equity
  •        Lower interest rates compared to construction loans
  •        Finance up to 6 months worth of mortgage payment s if the home is not habitable during construction
  •        Loan amounts can be based off of 110% of after improved value
  •        We can go to higher debt to income ratios (DTI) and credit scores down to 640


The Bad



Conclusion: Good!



While an FHA 203k loan does take a couple days longer and does have more moving parts than a conventional mortgage, it is still a great option to help you customize your house the way you want. Being able to finance your renovation costs into your mortgage, gain instant equity, and landing yourself in the home of your dreams is why the FHA 203k is one of the greatest mortgage products around and should be at least offered to you and considered.


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Jeff Jensen
The Federal Savings Bank/Lending in 50 states - Greenwich, CT

We have a separate division just for 203ks with dedicated underwriters at AnnieMac Home Mortgage.

Jun 19, 2014 07:29 AM #1
Jeff Onofrio
AnnieMac Home Mortgage - Mount Laurel Township, NJ
FHA 203k Lender and Homestyle Reno Specialist

Yes we do!  Thanks Jeff! 

Jun 19, 2014 07:34 AM #2
Diane Beaumont
Benchmark Mortgage - Woodland Park, CO
USDA,FHA,Jumbo,VA Woodland Park, CO Mortgage

We've done many 203K deals.  It's a must to know what one can expect going into this kind of loan.  Excellent blog!

Jun 19, 2014 08:48 AM #3
Sarah, John Rummage
Benchmark Realty LLC, Nashville TN 615.516.5233 - Nashville, TN
Love Being Realtors® in the Nashville TN Area!

I am hearing more about renovation loans, and they seem a useful solution for a buyer who finds a good house which will be a great house with some repairs and upgrades.


Jun 19, 2014 10:10 AM #4
Randy Shamburger
Movement Mortgage - Greenville, SC
FHA, VA, USDA and Conventional Mortgage Expert

Great information, thanks for sharing.

Have a Big day,


Jun 19, 2014 05:54 PM #5
Jeff Onofrio
AnnieMac Home Mortgage - Mount Laurel Township, NJ
FHA 203k Lender and Homestyle Reno Specialist

Thank you all for the comments!  Have a great day! 

Jun 19, 2014 08:53 PM #6
Bill Reddington
Re/max Southern Realty - Destin, FL
Destin Florida Real Estate

Don't have many FHA deals in this market. Have lots of VA buyers here and VA has a program also. The loans are doable but lots of work.

Jun 20, 2014 08:52 AM #7
Dave Halpern
Keller Williams Realty Louisville East (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert

The 203k loan is an under-utilized tool. Many buyers could create equity by using the FHA/203k loan to buy and renovate homes that need some work.

Aug 10, 2017 09:29 PM #8
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Jeff Onofrio

FHA 203k Lender and Homestyle Reno Specialist
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