The Section 203(k) Rehabilitation Mortgage Insurance Program is used to:

• Rehabilitate an existing one- to four-unit Structure, which will be used primarily for residential purposes.
• rehabilitate such a Structure and refinance outstanding indebtedness on the Structure and the Real Property on which the Structure is located.
• purchase and rehabilitate a Structure and purchase the Real Property on which the Structure is located; or
• rehabilitate the interior space of an eligible Condominium Unit excluding any areas that are the responsibility of the Condominium Association.

There are two types of 203(k) Rehabilitation Mortgages: Standard 203(k) and Limited 203(k), as described below:

• Standard 203(k)

The Standard 203(k) Mortgage may be used for remodeling and repairs. There is a minimum repair cost of $5,000 and the use of a 203(k) Consultant is required. Please note the following:

• Up to 6 draw requests are allowed.
• Draw requests are paid as work is completed & inspected by HUD consultant.
• No draw request can be paid at closing unless they are special order items.
• Limited 203(k)

The Limited 203(k) may only be used for minor remodeling and nonstructural repairs. Limited 203(k) does not require the use of a 203(k) Consultant, but a consultant may be used. The total rehabilitation costs must not exceed $35,000 and must not need any structural work. Please note the following:

• Draw for cost of materials can be released at closing.
• Copy of check is required for any rehabilitation funds released at closing for material costs payable to borrower and contractor
• Final draw is released upon completion of the project has been completed and final inspection

Loans must conform to all the parameters per FHA’s Lender’s Handbook 4000.1