Home Rehab Loans (Section 203k)
Eligible Borrowers and Homes
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.
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
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
- 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
- The commercial use will not affect the health and safety of
the occupants of the residential property
- 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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not legal advice and should not be interpreted as legal advice.
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information in summary form. This information may not be comprehensive,
is subject to change, and may not apply to all individual circumstances.
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