FHA 203(k) Loans: The "Fixer-Upper" Home Loan
In this guide, we’ll answer exactly what an FHA 203(k) loan is, who it’s best for, and situations where an FHA 203(k) loan makes the most sense for homebuyers.
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What Is an FHA 203(k) Loan?
- The same lenient qualification guidelines, including lower credit score and down payment requirements, that you’d get with a standard FHA loan.
- Costs for materials and labor on home renovations are rolled into the loan and paid in monthly installments as part of your mortgage payment.
- Can be used for primary residences only. This can include mixed-use residential properties and multi-unit properties (such as a duplex), so long as the borrower uses one unit as their primary residence.
Quick Answer
An FHA 203(k) loan is perfect for homebuyers who want more flexible financing and more manageable renovation payments on a fixer-upper home. Depending on the scale of renovations needed, borrowers can either get a standard 203(k) (for homes that need significant work) or a limited 203(k) (for homes that only need minor improvements).
Why Consider an FHA 203(k) Loan?
Here's why some homebuyers choose FHA 203(k) loans:
Low Down Payment & Credit Score Requirements
Just like standard FHA loans, a 203(k) only requires a 3.5% down payment and a credit score of 580 or higher, making it a great option for borrowers who have less savings in the bank for both a down payment and home renovation costs.
Financing the Home and the Renovations
The primary reason for getting an FHA 203(k) is to be able to tie together your home financing and renovation/labor costs into the same loan, giving you one stable monthly payment.
More Flexibility With Their Home Search
If homebuyers are comfortable with a renovation period, 203k loans give homebuyers more flexibility in the market to consider homes that might not be move-in-ready but are in a desirable neighborhood.
Helps First-Time Buyers Start Their Homeownership Journey
The three financial factors above make FHA loans a popular option for first-time homebuyers who might not have the savings or credit to qualify for a conventional loan.
Pro Tip
Find a home that’s in the neighborhood you love and is less expensive than your budget, but needs an updated kitchen or bathroom? A 203(k) can help you modernize your home while financing the home and the renovations in the same loan.
FHA 203(k) Loan Eligibility Requirements in 2025
Credit Score
580, or 500-579 with 10% down payment
Down Payment
3.5% (10% if credit score is less than 580)
Debt-to-Income (DTI)
Less than 43% (varies by borrower profile)
Mortgage Insurance Premium (MIP)
Required throughout life of the loan, or required for the first 11 years only with 10% down payment
Property Types Allowed
Primary homes (multi-unit primary homes allowed)
Compare FHA 203(k) Loans vs. Conventional Loans & Other Options
FHA 203(k)
Conventional Loan
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How to Apply for an FHA 203(k) Loan
Pre-Qualification (60 Seconds)
Answer a few questions online or with a UMortgage Loan Originator (LO).
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Frequently Asked Questions about FHA 203(k) Loans
Here are answers to the most common questions we get about FHA 203(k) loans.
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