Pros and Cons of the FHA 203K Loan

Like any loan, there are advantages and disadvantages of the FHA 203K loan. Understanding both sides can help you determine if it’s a good investment for you.


• You can buy a rundown house without having to pay cash for the entire purchase.
The home’s current value doesn’t matter as much as the after-repaired value does with the 203K program.

• You don’t need a large down payment.
You can put down just 3.5% on the home and have funds to buy and renovate the property. You can even use gift funds to secure the loan.

• It has flexible underwriting requirements.
FHA loans are known for their flexible underwriting requirements. You don’t need perfect credit or a low debt-to-income ratio to qualify.

• You’ll earn equity in the home fast.
Since you’re renovating the home, you’ll likely improve its value which can mean you earn instant equity in the home.

• FHA loans have competitive interest rates.
You don’t have to worry about paying high-interest rates for your home renovations. You get the same interest rate you’d get for the purchase loan, saving you money on the renovation costs.


• You must live in the property as your primary residence.
The FHA 203K program is only for owner-occupied properties. You can’t use it to buy and fix up a home and then rent it out or sell it. You must certify that you’ll live in the home.

• It can get complicated.
There are a lot of moving pieces to the 203K program. You aren’t relying only on yourself and your lender. You need the cooperation of contractors and possibly a loan consultant to make everything go smoothly.

• You can’t do the work yourself.
Even if you’re ‘handy’ you must hire professional contractors to do any work the loan proceeds pay for.

Are you looking to get Pre-Approved?


The Standard 203(k) may be used to purchase or refinance a home that needs remodeling and/or structural repairs. There is a minimum rehabilitation cost of $5,000 and the use of a 203(k) consultant is required.

Max completion time: 180 days (6 months)

Landscaping and hardscaping allowed

$5K minimum and no max repair amount

Structural changes are allowed


The Limited 203(k) may be used to purchase or refinance a home that needs minor remodeling and non-structural repairs not exceeding $35,000. The use of a 203(k) consultant is not required and there is no minimum rehabilitation cost.

Minor remodeling

HUD consultant is not required

Max completion time: 90 days (3 months)

No min and up to $35K in total renovations

Our goal is to provide excellent customer service.

Lori H

I’ve had the best experience for being a first time homebuyer,everyone was beyond helpful and explained all the steps in detail to someone with zero knowledge of the home buying process.

David A

My City was fantastic to work with. They were extremely knowledgeable and answered all questions quickly.

James S

Honestly, the process of me receiving and acquiring my mortgage was professional, efficient, and satisfying. I want to thank everyone at My City for they have done for me.

About the loan

This loan program provides financing to buy fixer-uppers and to fix them up all in one loan. It’s a great loan program that helps people buy homes they want and make them look how they want all without breaking the bank.

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