Home Rehab Loans (Section 203k)
Eligible Borrowers and Homes


Eligible Borrowers

All persons who can make the monthly mortgage payments are eligible to apply for Section 203(k) home rehab loans.  While individuals, local governments, and non-profit organizations may participate as borrowers in the program, the property must be used as a principal residence by an individual or family.

Eligible Homes

To be eligible for a 203(k) home rehab loan, the property must be a one- to four-family dwelling that has been completed for at least one year. Detached homes and townhouses are typical examples of eligible properties. Condominiums in one- to four-unit buildings are also eligible, subject to restrictions (interior improvements only, and additional restrictions apply – see eligible condos). The number of units on the site must be acceptable according to the provisions of local zoning requirements. All newly constructed units must be attached to the existing dwelling. Cooperative units and investment properties are not eligible.

Homes that have been demolished, or will be razed as part of the rehab work, are eligible provided some of the existing foundation system remains in place.

In addition to typical home rehab projects, this program can be used to convert a one-family home to a two-, three-, or four-family dwelling. An existing multi-unit dwelling could be decreased to a one- to four-family unit.

An existing house (or modular unit) on another site can be moved onto the mortgaged property; however, release of loan proceeds for the existing structure on the non-mortgaged property is not allowed until the new foundation has been properly inspected and the dwelling has been properly placed and secured to the new foundation.

A Section 203(k) rehab loan can finance the rehab of the residential portion of a property that also has non-residential uses. A 203(k) rehab mortgage may be originated on a "mixed use" residential property provided:

  1. The property has no greater than 25 percent (for a one story building), 33 percent (for a three story building), and 49 percent (for a two story building) of its floor area used for commercial (storefront) purposes
  2. The commercial use will not affect the health and safety of the occupants of the residential property
  3. The rehab funds will only be used for the residential functions of the dwelling and areas used to access the residential part of the property
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