Agents Home / 203(k) Overview

Renovation financing to turn your clients’ house into their dream home

With the FHA 203(k) Renovation Loan, your clients can purchase or refinance their primary home and renovate it - all with one convenient loan. This loan lets a buyer finance the cost of improvements into the purchase or refinance of the home. Prospect Mortgage has a nationwide team of 203(k) specialists who are helping people to take advantage of the opportunities this program supports, including:

  • Purchasing a fixer-upper home in need of upgrades, repairs or larger renovation projects from a traditional home seller, even if the homes is being sold “as is.”
  • Buying a foreclosed property from banks, housing agencies and government-sponsored enterprises, as well as properties eligible for short sale transactions.
  • Refinancing with today’s low rates and getting the funds they need to make their current home their dream home.

Overview of 203(k) Renovation Loan Features

  • Low Down Payments — A minimum down payment of 3.5% down is required. The down payment funds can be money the buyer has saved, or may be a gift from family members. Loans and grants from down payment assistance programs may also be available. For refinances, the loan amount is up to 97.75% of the value after renovation is complete.
  • Flexible Underwriting Guidelines — Typically, a buyer must have a credit score of 640 or higher, and they do not need to be a first-time homebuyer to be eligible for a 203(k) Renovation Loan. If renovation is extensive and the underwriter determines they cannot live in the home during construction, up to six months of mortgage payments  — principal, interest, tax and insurance  — may be included in the 203(k) Loan, so they don’t need to make double housing payments when the home is uninhabitable.
  • Many Types of Property Are Eligible — Single-family residences (either stand-alone homes or attached homes, like row homes), and homes in planned unit developments (PUDs) are 203(k) eligible. Although some restrictions and special rules apply, a buyer can also use 203(k) Renovation financing to purchase and refurbish condominiums, two-to-four unit properties and mixed-use properties.
  • Maximum Loan Amounts for 203(k) Loans  — The maximum amount your client can borrow is the lower of 96.5% of the sales price plus improvements or 110% of the after improved value. For a refinance, it is 97.75% of the after-improved value. The amounts are also subject to the standard FHA Loan limits, which vary by market. They currently range from $271,050 to $729,750 for a single-family property. To check the current loan limits by county, go to or check with a Prospect Loan Officer for the current limits.

How it Works

The renovation lending specialists at Prospect Mortgage are committed to providing personalized service to you. While each home loan customer's circumstances are unique, we wanted to provide a description of how the 203(k) process works, so that you have a good idea of what to expect when your clients are ready to purchase and renovate a home. Learn more »

203(k) Basics

What else is important regarding 203(k) Renovation Loans? Perhaps the most important information that highlights the advantages of the 203(k) program is that there are two types of these loans: the Limited K and the Consultant K. Learn more »

Renovation Guidelines

The experts at Prospect Mortgage can answer all of your clients' specific questions about the types of repairs and renovations that they can undertake when they finance their home with a 203(k) Renovation Loan. Learn more »

Foundation Financing

While you may know that your clients can use a renovation loan to repair or rebuild their home, did you know that they could also use the funds to raise the foundation of their home? Learn more »

Prospect Mortgage the top 203(k) lender in the nation. According to data from the Department of Housing and Urban Development (HUD), Prospect Mortgage ranks No.2 in the nation for originating 203(k) Renovation Loans*. Our Loan Officers are ready and eager to discuss details of this helpful home-financing solution with you and your clients.

* As of April 2016.

Server Host Name:VPROWSEX01-ELS1