FHA 203K Renovation Loan Guidelines

Major Features:

• Low Down Payment (3.5%) for purchases
• 620 credit score or better.
• Down payment can be gifted.
• Non-occupant CoBorrower allowed on purchase.
• 3% Seller Credits.
• First Time Home Buyers allowed.
• Available on 1-4 units.
• Reserves required for 3-4 unit properties.
• Primary Residence only.
• Lending based on 110% of "after-improved" value on purchase.
• Refinance lending based on 97.75% of Current Value + Cost of Renovations (not to exceed 110% of After Improved Value or Maximum LTV per lender overlay)
• Maximum loan amount per county loan limits.

While the basic underwriting guidelines for the FHA 203K Loan are technically the same as a Standard FHA loan, the FHA 203K Home Renovation loan has lender specific overlays that make the guidelines stricter.   Because of the additional risk involved with the product (construction not being completed, etc.) the credit profile of the borrower is more stringently scrutinized.   Even if the borrower's credit profile receives an Approved/Eligible finding through the Automated Underwriting system, the underwriter has the discretion to decline either the borrower(s) or the project itself.

If you have additional questions, please feel free to complete the Got a Question? form below.