🛠️ Buy It and Fix It With One Loan: The FHA 203(k) Limited
A few years ago, I helped a couple purchase their home with just 5% down. It was a great fit for them at the time — solid neighborhood, the space they needed, and a bonus: a detached garage with potential.
Fast forward to today — their teenage son was getting older and needed his own space. Naturally, they started exploring how to turn that detached garage into an Accessory Dwelling Unit (ADU) so he could move in and have a bit more independence.
They gave me a call, hoping to tap into their home’s equity with a line of credit. But after running the numbers, it became clear that a traditional HELOC wouldn’t provide enough funds to cover the full conversion.
That’s when I brought up a lesser-known option: the FHA 203(k) Limited loan.
The FHA 203(k) Limited program snapshot outlines a renovation loan product allowing borrowers to finance both the purchase and rehabilitation of a property with a single mortgage, specifically for non-structural repairs or improvements. Here’s a summarized overview for reference or communication:
🏡 What Is It?
The FHA 203(k) Limited is designed for:
- Homebuyers purchasing a fixer-upper
- Homeowners refinancing and remodeling
- Primary residences only
You can finance both the home and non-structural renovations—like kitchens, bathrooms, floors, HVAC systems, roofs, appliances, and more—with a single mortgage.
💡 Why Use a 203(k) Limited?
- ✅ Finance up to $75,000 in repairs and upgrades
- ✅ Only 3.5% down payment
- ✅ One loan, one closing
- ✅ No 203(k) Consultant required
- ✅ Ideal for non-structural repairs and cosmetic improvements
- ✅ Perfect for first-time buyers and FHA borrowers
🛑 What You Can’t Do With It
This is for light remodeling only. You can’t use this loan for:
- Structural changes or additions
- Foundation work
- Landscaping (except for erosion prevention)
- Pools, hot tubs, or other luxury features (Bummer ! I know! 😒)
🧾 Borrower Submission Checklist
Here’s what we’ll need to get started on your FHA 203(k) Limited loan:
✅ Basic Docs
- Loan Application (apply online or schedule an appointment)
- Government-issued ID
- Most recent 30 days of paystubs
- Last 2 years of W-2s or tax returns (for self-employed borrowers)
- Most recent 2 months of bank statements
✅ Property & Repair Info
- Signed Purchase Contract (if purchasing)
- Contractor’s Written Proposal with:
- Itemized list of repairs
- Cost breakdown (labor + materials)
- Statement that work is non-structural
- W-9 form from contractor
- Contractor license & insurance (if required by local jurisdiction)
✅ Appraisal & Renovation Docs
- Appraisal supporting As-Is and After-Improved Value
- Permit list (if applicable)
- Final Work Plan (signed off before close)
💬 Final Thoughts
The FHA 203(k) Limited can turn a fixer into your dream home—or give your current space the refresh it deserves. With just one loan, you get flexibility, affordability, and peace of mind.
Have a property in mind? Let’s talk!
👉 Schedule a Free Consultation https://freshhomeloan.com/schedule-a-meeting/
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