Getting An FHA 203k Loan


With the number of houses that are currently owned by the bank (also called REO), it comes as no surprise that many of these homes are in need of repair. One popular option is the HomePath loan if the home is owned by Fannie Mae – but if the home isn’t owned by Fannie Mae, the most popular loan program for houses that need repairs is the FHA 203k loan.

Getting An FHA 203k Loan: The Process Of Getting An FHA 203k Loan

Many people think that getting an FHA 203k loan is time consuming and difficult. This certainly doesn’t have to be the case – but if you choose to work with the wrong loan officer, it is certainly possible. A reasonable expectation is that for most renovations there is no reason the process cannot be completed in 45 days from start to closing.

45 days is a good timeframe to expect when dealing with the FHA 203K Streamline which doesn’t involve HUD 203K Consultants or architects.

There are two different types of FHA 203k loans: the FHA 203k streamline and the full FHA 203k.

FHA 203k Streamline

The FHA 203k streamline program is the “easy” FHA 203k program and is for properties that are in need of less than 35k in repairs and don’t involve any structural repairs.

When doing an FHA 203k streamline, you will have two draws: one where the lender will release 35-50% upfront and 50% when the work is completed. Most of the time, the lender will require a final inspection before the final disbursement.

Full 203k Loans

For properties that require more than 35k in repairs, the process can be more complicated because it involves an architect and contractor bids along with a HUD approved 203k consultant. For full FHA 203k loans, the process generally looks like this:

  1. Contact lender for FHA 203k pre-approval
  2. Make offer on property: be sure to indicate the property will be financed with a FHA 203k loan
  3. Offer accepted
  4. Loan submission & underwriting
  5. FHA 203K consultancy
  6. Architectural drawings (if required)
  7. Contractor bids & contractor selection
  8. Appraisal is completed
  9. HUD Consultant inspection
  10. Clearing all underwriting conditions
  11. Close the loan / sign final loan paperwork
  12. Repair work begins
  13. Repair work is completed, final inspection is done and final disbursement is made

Do you have more questions about the FHA 203k loan and what the process looks like? Be sure to contact your loan officer.


About Author

Justin McHood is a Mortgage Commentator living in the Phoenix, Arizona area and is happy to answer any mortgage-related questions that you may have.


  1. Here in Sacramento where foreclosures have been over 60% of our market there has been a huge growth 203k loans. In my opinion, they are the best way for a first time home buyer to move into a home that needs work, especially for buyers with little cash on hand.

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