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If you’ve been avoiding purchasing a home because you don’t have the cash for upgrades or renovation repairs, the Federal Housing Administration (FHA) has a renovation loan program just for you. Its called an FHA 203(k) loan and it has two options depending on the extend of your renovations. The FHA Limited 203(k) and standard FHA 203(k) Consultant Loan eliminate the need for large out-of-pocket renovation cost that can drain your savings. With these options you can simplify the financing process by financing your home and your renovation cost into one FHA 203(k) loan. Whether you’re repairing your current home or purchasing a fixer-upper, you should consider applying for either a Limited K or Standard loan.

What is an FHA Limited (Streamline) 203(k) Loan?

Designed specifically for homes that may need cosmetic repairs or upgrades, the Limited (formerly known as Streamline) 203(k) Loan is intended for homes that can be remodeled, repaired, or updated for less than $35,000. As long as the intended repairs don’t exceed that amount, you may be eligible for an FHA Limited 203(k) Loan from Mortgage Now Inc. Before considering applying for a Limited (formerly known as Streamline) 203(k) Loan, here is a sample of some projects that are eligible. 


  • Major rehabilitation or major remodeling

  • New construction, including room addition

  • Repairs of structural damage

  • Landscaping or similar site amenity improvements

  • Any repair requiring a work schedule > 6 months

  • Foundation work

  • New swimming pool

  • Repairs requiring detailed drawings or architectural exhibits

  • New tennis court, gazebo, or bathhouse

  • Other types of luxury items


  • Minor kitchen remodeling which does not involve structural repairs

  • Pool repairs

  • Interior and exterior painting

  • Repair/replacement/upgrade of appliances

  • Window and door replacements

  • Replace/repair roof, gutters and downspouts

  • Basement finishing/remodeling/waterproofing (not requiring structural repairs)

  • Improvement for accessibility for persons with disabilities

  • AND more!

What is an FHA 203(k) Consultant Loan?

Typically reserved for homes requiring more than $35,000 in repairs, Mortgage Now's FHA 203(k) Consultant loan is usually used for homes with more extensive work to be done. In order to apply for the loan, there must be at least $5,000 worth of repairs, and loan limits are based on property type and location. Since the FHA 203(k) Consultant loan allows for more extensive work, more supervision is required throughout the process. A 203(k) Consultant will inspect your property and help you determine which repairs are required to bring the property up to FHA minimum standards. Below is just a sample of eligible repairs with a FHA 203(k) Consultant loan.

  • Full kitchen or bathroom remodel

  • Garage (attached/detached/new)

  • Structural alterations and additions

  • Major Landscaping/decks/fencing

  • Permanent improvements to the house

  • Install appliances

  • Repair swimming pool

  • Install flooring / tile

  • Interior and exterior painting

  • Improvements that are a permanent part of the real estate

  • New tennis court

  • Gazebo or bathhouse

  • Additions or alterations for commercial use

  • Photo mural

  • New Swimming pool

  • Outdoor fireplace / barbecue pit

  • Other types of luxury items

For FHA 203(k) Consultant Loan contractor must also sign the work write-up, acknowledging the cost of repairs. With the Limited (Streamline 203(k) loan) , contractors must sign a detailed contractor bid, which may include a breakdown of labor and materials for each part of the contract.


If you’re purchasing a home and happen to be a professional contractor and/or believe you’re otherwise qualified to perform some of the renovation work yourself, talk with a Mortgage Now Loan Originator today. Special rules apply in both of these circumstances, and our experts can explain in detail.

How Do Limited (formerly known as Streamline) 203(k) and 203(k) Consultant Loans Work?

In the past, those who purchased a fixer-upper would have to apply for two loans in order to finance the repairs: a mortgage and a separate home equity loan or use their savings account for renovations. Now, the two loans are combined, resulting in easy and convenient loan known as the Limited 203(k) Loan or the standard 203(k) Consultant Loan. The loans can be an adjustable-rate or fixed-rate mortgage.


With Limited 203(k) and Consultant K Loans, you can begin your home renovations as soon as the loan closes. Repairs must start within 30 days of closing and be completed within six months. With Limited K Loans, contractors typically receive 50% of the total amount when renovations begin, with the remaining amount due as soon as the final inspection is complete. With Consultant K Loans, the Consultant inspects the repairs as they’re completed and request the lender to release the funds. In both cases, any remaining funds are applied to the principal balance of the loan.

FHA 203(k) Consultant Loan vs. FHA Limited (Streamline) 203(k): Comparison of Features

When it comes to choosing the best FHA 203(k) loan for you and your home, there’s a lot to think about. How much will the repairs be? Who will be performing the work? How many times can I draw money? Are the home improvement projects I have in mind eligible? Before making a final decision, use the below chart to decide which home improvement loan is right for you.

FHA 203(k) Consultant Loan

Nature of project:
Substantial rehabilitation/renovation


Repair cost:
Min. $5,000/Max as supported by appraised value.

Self-help (owner performing work):

Owner GC (multiple contractors):

Max. number of draws:
Up to 5 (plus final release)

Initial draw/release for materials:
Fifty percent paid directly to supplier of materials with copy of invoice.

Max. financed mortgage payments:
If the property is uninhabitable up to 6 with DE UW approval

HUD REO sales:

Contingency reserve:
Yes 10% (15% if utilities are not on)

FHA Limited (Streamline) 203(k)

Nature of project:
Repair and remodeling


Repair cost:
No Min. $35,000 Max total costs

Self-help (owner performing work):

Owner GC (multiple contractors):
Yes (Max – 3 contractors)

Max. number of draws:
1 (plus final release) per contractor

Initial draw/release for materials:
Up to 50% of rehab total amount.

Max. financed mortgage payments:

HUD REO sales:

Contingency reserve:
Yes 10% (15% if utilities are not on)


What is the FHA One-Time Close Loan?

The FHA One-Time Close (OTC) loan is a product that allows borrowers to combine financing for a lot purchase, construction and permanent mortgage into one first mortgage loan. Ideally suited for borrowers who are purchasing new construction, the FHA OTC loan offers the benefits of low money down financing, competitive interest rates and one closing for all financing.

FHA One-Time Close Loan – The Basics

  • Designed to simplify the financing process for new home buyers, eliminating the need to obtain both a construction loan and permanent mortgage

  • Insured by the Federal Housing Administration (FHA), which helps keep rates low

  • For Construction-to-Permanent, closing occurs before construction begins

  • 96.5% Maximum LTV

  • No payments due during the construction phase

  • Closing costs may be financed

  • 15 and 30 year fixed rates available

  • No re-qualification once construction is complete

  • A single closing reduces closing costs, saving your borrowers money

What are the benefits?

Single Closing Saves Time and Money


With the FHA OTC loan, borrowers can secure financing for the purchase of the land, the construction and the home’s permanent mortgage in a single closing. Only one closing means only one set of closing costs, helping save money. It also allows the process to move forward without interruption from potential snags in financing other aspects later on.

Low Down Payment
  • The FHA OTC loan’s maximum loan-to-value (LTV) ratio is 96.5%. This gives borrowers the freedom to close on the loan with as little as 3.5% down

No Re-Qualifying


  • Once the construction phase is complete, the borrowers do not have to re-qualify for a permanent mortgage since the permanent loan is closed before construction begins

Fixed Rates


  • Since the permanent mortgage is closed before construction begins, the fixed rates on FHA OTC loans will not be subject to change during the construction phase or at any point

HomeStyle® Renovation Mortgage

The HomeStyle Renovation mortgage provides a convenient and flexible way for borrowers considering home improvements to make repairs and renovations with a first mortgage, rather than a second mortgage, home equity line of credit, or other more costly methods of financing. 


  • One- to four-unit principal residences, one-unit second homes, or one-unit investment properties, including units in condos, co-ops, and PUDs. 

  • MH is eligible, with the eligible renovation funds capped at the lesser of $50,000 or 50% of the “as completed” appraised value. (Available in DU on March 17.)

  •  Any type of renovation or repair is eligible, as long as it is permanently affixed to the property. Renovations should be completed within a twelve-month period from the date the mortgage loan is delivered.


This is the only construction loan product available for an investment property. One-unit investment properties allowable.

The above content is for general informational purposes only and is not provided as professional advice for your specific situation. Please speak to a Mortgage Loan Originator to discuss loan options available.

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