California FHA 203k Purchase

The FHA has come out with the 203k loan, which is used to make improvements to a home and can be utilized for purchasing or refinancing.  There is also the FHA 203k refinance loan that can be used the same way (borrower must be in the home 6 months to do this).  This loan program is becoming more popular as many of the homes that are on the market need some TLC or if you want to add on to the house.

Eligible Improvements

Luxury items and improvements are not eligible to include in the rehabilitation. However, the homeowner can use the 203(k) program to finance such items as painting, room additions, decks and other items even if the home does not need any other improvements. All health, safety and energy conservation items must be addressed prior to completing general home improvements.

Here are the basic guidelines:

  • FHA traditional guidelines
  • FHA down payment (3.5%)
  • Assumable loans
  • Finance up to 6 months of mortgage payments (escrow account)
  • Purchase or Refinance 
  • Condos okay
  • 1-4 unit dwellings only
Eligible Borrowers:
  • Owner Occupants
  • Non- Profits
  • No investors
  • Loan Types
    • 30 or 15 year fixed rates
    • Purchase or refinance 
    • Qualified borrower may assume
  • Property Eligibility
    • Single family dwellings
    • Condominiums
    • Townhouses 
    • 1-4 Unit buildings
  • Examples of improvements
    • Safety and Hazard improvements must be done
    • Minor kitchen and bath remodels
    • Functional upgrades
    • Plumbing, heating air conditioning, and electrical upgrades
    • Interior / exterior painting
    • Septic and well systems
    • Decking, patio, porches
    • Roofing, gutters and downspouts
    • Flooring, tiling and carpeting
    • Energy conservation improvements
    • Kitchen / laundry appliances
    • Access for the disabled
    • New windows / doors
  • Home Inspection:
    An FHA Approved 203(k) consultant (estimator) will estimate the cost of your construction in order to determine the type of repairs and the costs required for the improvement


The appraiser must provide an opinion of the After-Improved value of the subject property, and in some cases, may be directed by the lender to provide the As-is value.

In those cases for which both As-is and After-improved values are required, the valuation analysis may consist of either one or two separate appraisal reports.

The number of appraisals depends on the complexity, scope and lender review of the proposed rehabilitation and nature of the work.

  • Other Eligible Costs:
    • Contingency reserve (10-15%)
    • Origination Fee
    • Up to 6 months PITI mortgage payments
    • Permit costs
    • Consultant fees
    • Inspection and title update fees
    • Architectural & Engineering fees (if needed)
To see if you qualify for this, click the Apply Now button below


Apply Now

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