Buying a home that needs a little TLC? Or maybe you’ve found a property with potential but not quite move-in ready? That’s where the FHA 203(k) loan steps in—a mortgage that lets you purchase and renovate with a single loan.
At ALCOVA Mortgage, we believe there’s more than one path to homeownership—and sometimes the best home isn’t the prettiest one on the block (yet). Here’s everything you need to know about FHA 203(k) loans and how they could help you turn a fixer-upper into your dream home.
The FHA 203(k) loan—also called a rehab loan or renovation loan—is backed by the Federal Housing Administration (FHA). It allows homebuyers and homeowners to finance both the purchase (or refinance) of a home and the cost of renovations into a single mortgage.
Instead of juggling multiple loans, contractors, or lines of credit, the 203(k) simplifies the process, giving you one monthly payment—and a fresh start.
An FHA-approved lender (like ALCOVA) evaluates both the purchase price of the home and the estimated renovation costs. The loan amount is based on the anticipated value of the property after improvements are complete.
The funds for repairs are placed in an escrow account and released as work is completed, usually in draws. This ensures that repairs are made properly and on schedule.
There are two versions of the FHA 203(k) loan, depending on the scope of your renovations:
Eligible projects include:
✅ Kitchen and bathroom remodels
✅ Flooring and carpeting
✅ Roofing and gutters
✅ HVAC, plumbing, and electrical systems
✅ Painting (interior/exterior)
✅ Accessibility improvements
✅ Structural repairs
✅ Energy-efficient upgrades
✅ Landscaping (within limits)
Keep in mind—luxury upgrades like swimming pools or outdoor kitchens typically aren’t allowed.
To qualify, you must meet standard FHA loan requirements, including:
Bonus: The FHA allows gifted down payments and higher debt-to-income ratios compared to conventional loans, making this a more flexible option for many buyers.
A 203(k) loan is a powerful tool for homebuyers looking to build equity, personalize their space, or bring an aging home back to life. It’s also great for current homeowners who want to refinance and renovate in one move.
Whether you’re a first-time buyer with vision or a homeowner planning a major upgrade, ALCOVA can help you determine if the FHA 203(k) loan is the right fit.
At ALCOVA, we’re not just here to close loans—we’re here to help you create home. Our team of local, knowledgeable mortgage pros will walk you through every step of the 203(k) process with transparency, clarity, and personalized care.
Don’t let a little fixer-upper scare you off. With the right financing, your future home is closer than you think.
Contact ALCOVA Mortgage today or start your pre-approval online to see how an FHA 203(k) loan can work for you.
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