Need to Repair, Renovate, or Rebuild?
Explore FHA 203(k) and FHA 203(h) Loan Options
The FHA offers two types of rehabilitation loans for borrowers looking to purchase or refinance a home while securing funds for repairs, remodeling, or renovations: the FHA 203(k) Rehab Loan and the FHA 203(h) Rehab Loan.
The key difference? The FHA 203(k) is intended for home buyers and homeowners making improvements to a property, while the FHA 203(h) is specifically for those rebuilding or purchasing a new home after a Presidentially Declared Major Disaster.
FHA 203(k)
The FHA 203(k) loan is designed for home-buyers looking to purchase and renovate a home or current homeowners who want to refinance and make improvements. Instead of taking out separate loans for the mortgage and renovations, it combines everything into one loan—making it a simpler option for financing home repairs and upgrades.
Two Types of 203(k) Loans:
Limited 203(k):
- Allows homebuyers and homeowners to finance renovations, repairs, and upgrades directly into their mortgage, making home improvements more affordable and accessible
- Homeowners can make minor remodeling and non-structural repairs, improvements, or prepare their home for sale.
- Home-buyers can make their home move-in ready (think: new floors, kitchen updates, etc.).
Standard 203(k):
- Made for major rehabilitation and repair of single-family properties.
- Includes structural repairs and room additions.
- This is ideal for major renovations and structural additions. It also helps create homeownership opportunities by making fixer-uppers more accessible.
FHA 203(h)
Now, the FHA 203(h) loan is something completely different—it’s a special mortgage designed for disaster victims. If your home was destroyed or severely damaged in a Presidentially Declared Disaster Area, this loan helps you buy, or rebuild a new home.
- Available to those whose primary residence was destroyed or severely damaged.
- Can be used to buy or rebuild (not for second homes or investment properties).
- Does not cover renovation costs—only purchase or reconstruction.
- 0% down payment
- Flexible credit requirements
- Homeowners can combine the 203(h) loan with the FHA 203(k) rehabilitation loan to fund both the purchase and repair of a damaged property
Who Qualifies?:
- Property must be located in a Presidentially Declared Major Disaster Area (PDMDA), as designated by FEMA.
- Homeowners or renters whose primary residence was damaged or destroyed in a Presidentially Declared Disaster Area.
- Must apply within one year of the disaster declaration.
Both FHA 203(k) and FHA 203(h) loans offer unique benefits, but the right choice depends on your situation. Connecting with a loan officer is the best way to explore your options and determine which program fits your needs.
If you have any questions or scenarios, we’re happy to walk through your specific situation and help you figure out which loan is the best fit—no pressure, just helpful information to make sure you make the best decision for you.