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FHA 203(k) Guide

Can I Qualify for an FHA 203(k) Renovation Loan?

Possibly. An FHA 203(k) can finance the purchase or refinance of an eligible existing home and its renovations in one mortgage. The property, the scope of work and your file all still have to qualify.

Check Your Eligibility →
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Start With the Question

One FHA loan for the purchase and the repairs, with rules attached.

HUD’s Section 203(k) Rehabilitation Mortgage Insurance Program insures a mortgage that covers the purchase or refinancing of a home and its rehabilitation. The home generally has to be an existing property completed at least one year before the FHA case number is assigned. Rehab funds are held in escrow and released as the work is completed.

There are two program types, Limited and Standard, and they are not interchangeable. Ordinary FHA requirements for credit, income, assets, occupancy and county loan limits still apply. This page separates public HUD and CFPB rules from how Texana Bank Mortgage describes its own process, and it does not quote rates or promise an approval.

Source: HUD 203(k) program overview

A 203(k) is an FHA mortgage with a renovation escrow. It is not cash for any project, and it is not ground-up construction. For an FHA purchase with no renovation escrow, see the FHA 3.5% down guide instead.
Limited vs Standard

Match the scope of work to the program type first.

Limited 203(k)

For minor remodeling and nonstructural repairs. Total rehabilitation costs may not exceed $75,000. A HUD-approved consultant is optional. Rehabilitation must be completed within nine months.

Standard 203(k)

For major rehabilitation and repair. Requires at least $5,000 in eligible improvements and a HUD-approved 203(k) consultant. Rehabilitation must be completed within 12 months. The total loan must still fit the county FHA limit.

Not the old $35,000 cap

The Limited cap was raised from $35,000 to $75,000 for FHA case numbers assigned on or after November 4, 2024. Materials that still say $35,000 are out of date against HUD’s published rules.

Source: HUD 203(k) program types · Mortgagee Letter 2024-13. Lender requirements can be stricter.

How the Loan Is Sized

After Improved Value, loan limits and the rest of the file.

The figures below describe public FHA rules. Lender requirements may be stricter, and Texana reviews the specific file before determining eligibility.

What property can be financed?

HUD’s overview lists one- to four-unit homes, townhomes, eligible condominiums (interior improvements), manufactured homes titled as real estate when the rehab does not affect structural components, HUD REO properties and primarily residential mixed-use properties. The existing structure must have been completed at least one year before case-number assignment. Ground-up construction is a different product.

HUD — 203(k) Rehabilitation Mortgage Insurance Program overview

What counts as Limited and what needs Standard?

Limited is for minor remodeling and nonstructural repairs. Structural work or a larger scope belongs in Standard. HUD’s program-types page and Handbook 4000.1 set out the eligible and ineligible improvements for each, so a scope of work should be matched to a program type before underwriting begins.

HUD — 203(k) program types: Limited and Standard

How long do I have to finish the work?

Under Mortgagee Letter 2024-13 and Handbook 4000.1, Limited rehabilitation may not exceed nine months and Standard may not exceed 12 months, as set out in the Rehabilitation Loan Agreement. Mortgagee Letter 2026-06, dated June 23, 2026, updates Limited draw policy to a maximum of four draw requests per contractor. That is HUD’s rule, not a contractor schedule.

HUD Mortgagee Letter 2026-06 — Limited 203(k) draws, June 23, 2026

What is After Improved Value?

The lender obtains an appraisal to establish After Improved Value, an estimate of what the property is worth after the planned work. Handbook 4000.1 sizes the maximum mortgage using a lesser-of structure. It includes financeable purchase and repair costs on one side and a cap tied to After Improved Value on the other (110% for the Handbook’s purchase path, 100% for condominiums), subject to FHA loan limits. It is not a single flat percentage of the after-repair value.

HUD Handbook 4000.1 — edition issued January 10, 2025 (HUD’s current Handbook governs)

What are the 2026 FHA loan limits?

For case numbers assigned on or after January 1, 2026, the one-unit floor is $541,287 and the standard high-cost ceiling is $1,249,125. The total 203(k) loan, meaning purchase or refinance plus rehabilitation, must fit the county limit. Check the county and unit count in HUD’s lookup. A loan limit does not establish the amount you personally qualify to borrow.

HUD — 2026 FHA forward mortgage loan limits, December 11, 2025

Do credit-score and down-payment rules still apply?

Yes. HUD’s general FHA bands still apply: a Minimum Decision Credit Score below 500 is not eligible for FHA-insured financing, 500–579 is limited to 90% LTV, and 580 or higher is eligible for maximum financing. Because the loan also finances rehab costs, cash to close, contingency reserves and the lesser-of maximum-mortgage tests still matter. The FHA 3.5% down guide covers the score bands in more depth.

HUD Handbook 4000.1 — edition issued January 10, 2025 (HUD’s current Handbook governs)

What about mortgage insurance?

203(k) loans are FHA-insured, so FHA mortgage insurance applies. For most FHA forward mortgages the upfront premium is 1.75% of the base loan amount, and the annual premium varies by term, LTV and base-loan band. CFPB explains that mortgage insurance protects the lender, not the borrower. These are insurance premiums, not interest rates or a quote for your loan.

HUD Mortgagee Letter 2023-05 — mortgage insurance premiums, February 22, 2023

Does a qualification check affect credit?

CFPB explains that soft inquiries generally do not affect scores, while hard inquiries can. Texana’s renovation page describes a soft inquiry for initial pre-qualification. Ask which type will be used before any credit pull; a later formal application can involve a hard inquiry. A soft inquiry is not loan approval.

CFPB — credit inquiries, reviewed September 5, 2025

Look up your county’s FHA loan limit · Texana’s renovation product and pre-qualification process

Compare Your Next Question

Which guide fits what you need?

Frequently Asked Questions

Questions to Bring to Your Review

Sources and Next Steps

Check the rules. Then review your file.

Sources checked September 30, 2026. HUD’s current Handbook 4000.1 and applicable Mortgagee Letters govern FHA policy. CFPB explains credit inquiries and mortgage insurance; Fannie Mae’s page is cited only as a conventional alternative; Texana’s product page describes its own initial pre-qualification process.

Ready to explore your renovation path? Use Check Your Eligibility or call (888) 272-8264. Confirm the inquiry type before a credit pull.

This page is education, not a commitment to lend. All loans are subject to credit approval and underwriting. Equal Housing Lender. NMLS #407536.

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