FHA 203k (Rehab) Loan

Updated 8 months ago ​by Aneesah Emeka

In a nutshell: 
A "fixer-upper" loan designed to help buyers finance older homes that need major repairs such as structural repairs and/or remodeling, but not luxury upgrades like adding a swimming pool or tennis courts. You can use the loan to fix up the house, add a second story to the building, or use it for energy conservation upgrades like new roofing and new appliances. 

Lenders will want a itemized list of the needed repairs. 


  • A rehab loan lets you buy a home that lenders might otherwise deem “uninhabitable.”
  • The loan covers the cost to purchase the house and do the renovations. 
  • It often includes a 20% reserve fund in case repairs exceed estimates. 
  • The down payment is lower, and you can find excellent interest rates if you shop several 203k lenders.


  • Not all properties are eligible.
  • Applying for a rehab loan is complicated -- you’ll need to hire a consultant.