The FHA 203k loan is a home renovation loan program that provides funds for purchasing and renovating a home. There are two types of FHA 203k loans: The first is the Normal (or also refereed to as a Standard/Full) 203k, which is typically available for properties that may need structural repairs such as a new roof, or a room addition, for example. The second is the Streamlined 203k, which is available for non-structural repairs such as painting, floor coverings, windows, new appliances, etc.. The minimum Loan Amount is $5000.
This can be a great option for someone looking to purchase a home that is in need of repair and willing to incorporate the necessary improvements into the new loan. Interest rates can typically run a bit higher for this type of loan as compared to a regular FHA loan (program 203B). It may also be a good option for a seller who wishes to sell their property but does not have sufficient funds to make repairs required to make their home financeable. These loans are more complex than standard non-rehab FHA loans and so can also require more time to get approved and closed.