Standard and Streamline FHA 203k Loans

BY The Lenders Network

Do you want to get a loan to buy a house, and get cash for repairs?

That’s exactly what the FHA 203k Program is all about.

In this article we are going to go over everything you need to know about 203k loans. Where to find them. How to qualify. The differences in a standard and streamline 203k loan. Which types of homes qualify, and more.

Speak to a Lender and get current 203k rates

What is a 203k loan?203k

A 203k loan is a mortgage that includes both the cost of buying a home and the renovation costs. It is given to those who choose to rehab a damaged or older home. This home purchase and renovate loan is backed by the Federal Housing Administration and funded by 203k mortgage lenders. There are two types of FHA 203k renovation loans available, standard and streamline. We will explain the differences and go over the pros and cons.


  • Low 3.5% downpayment requirement
  • Minimum 620 credit score
  • Low interest rates
  • Get extra cash to make cosmetic repairs
  • Streamline 203k has a low minimum loan amount
  • Borrow money to make mortgage payments for up to 6 months
  • Get cash for major repairs with standard 203k loans


  • Must hire professional licensed contractors (no diy repairs)
  • No eligible for investment properties
  • Requires mortgage insurance premiums
  • Extended closing times
  • Construction consultant required
  • Some lenders do not offer them
  • Labor and time intensive

Standard vs Streamline 203k Mortgages

A standard 203k mortgage is for more extensive renovation projects, like structural repairs in which you are not able to occupy the home during construction. The other type is a streamline FHA 203k loan, which is for cosmetic repairs requiring up to $35,000 in funds.

A purchase contract will be the same as any other only you will want to add that it is contingent on you getting approved for a 203k home loan.

Streamline FHA 203k Loans

You used to have to get 2 separate loans to purchase a home and make cosmetic changes or repairs. With a streamline 203k you can now buy a home, and borrow money for repairs and have just one mortgage payment. A streamline 203k eliminates quite a bit of paperwork that is required for standard 203k loans making it simpler process.

The appraiser will give you a list of recommended repairs, and in some cases required repairs. You will get a bid from a contractor and pass it along to your lender. You will have a time frame to have the repairs completed for the final appraisal. Once the construction is complete you will be ready for closing.

Type of work allowed:

  • Roof repair, gutters, downspouts
  • Existing HVAC systems
  • Electrical and Plumbing systems
  • Painting
  • Flooring
  • Appliances
  • Weatherization
  • Basement waterproofing
  • Repair, replace or add exterior decks, patios, porches
  • Window and door replacement and exterior siding
  • Septic and/or well repair or replacement
  • Improvements for accessibility
  • Lead-based paint stabilization or abatement of lead-based paint hazards

Standard 203k Loans

Just like a streamline 203k, a standard 203k loan allows you to get one loan for both the purchase of a home, and the cost of the repairs. Standard 203k mortgages are for homes that require major renovations, there is no limit for the amount of cash you’re able to receive to repairs.

There is more intensive paperwork requirements for a standard 203k. Buyers will not be permitted to occupy the property. However, you are allowed to add up to 6 months of mortgage payments into the loan. You will have a construction consultant that is assigned to oversea the work that is needed. The amount of additional paperwork and time involved in these types of loans often discourage many lenders from offering them.

Type of work allowed:

  • Major rehabilitation, such as the relocation of a load-bearing wall
  • New construction, including room additions
  • Repair of structural damage
  • Repairs requiring detailed drawings or architectural exhibits
  • Landscaping or similar “site amenity” improvement
  • Any repair requiring a work schedule longer than three (3) months; or rehabilitation activities that require more than two (2) payments per specialized contractor
  • Improvements that require a plan reviewer
  • Improvements that result in work not starting within 30 days after loan closing; or cause the owner to be displaced from the property for more than 30 days during the time the rehabilitation work is being conducted

203k Loan Requirements

The home must meet FHA requirements, but the purchaser also needs to meet the criteria set by the Federal Housing Administration to qualify.

  • You must choose an FHA-approved lender.
  • 640 minimum credit score.
  • Solid employment history
  • No late payments in the past 12 months
  • No bankruptcies or foreclosures within the past 36 months
  • Proof of income
  • Two years of tax returns
  • 3.5% Downpayment

In Conclusion..

While buying a home that needs renovations can usually mean a good deal. However, you should really think about the drawbacks of these types of loans. They will take up much of your time and can often drag on for several months. If you’re patient and have the extra time to spend overseeing the repairs and dealing with contractors it could be well worth it. In the end, you will have a home that is livable and suits your needs once you’ve completed the repairs.

Are you thinking about purchasing a home that needs work before you can live in it? If so, talk to a lender about the possibility of getting a 203k loan. To start the process, fill out the convenient form on our home page. Lenders in our network will offer loan options that you can compare and choose to make your home ownership dreams come true.

Speak to a Lender and get current 203k rates