Found the home of your dreams! Oh no, it needs updating?

So you’ve found that home of your dreams, except you don’t like the interior design, it’s not functional or just downright unlivable in it’s current condition.
The next big question you ask yourself is, “How do I pay for the needed updates?”

If you have the money set aside having anticipating wanting a fixer-upper. Wonderful!

But if not there is a program called the FHA 203(k) Rehab Loan.

The FHA 203(k) Rehab Loan wraps the costs of renovation, materials and labor into your mortgage or if you already own refinancing. If you want to go with a simplified name just call it a home improvement loan.

A little background first…I know I know, not the boring stuff 🙂 but I promise to keep it short and simple.

First off it’s backed by the Federal Government through the FHA insured program. Meaning essentially you would have to be within FHA limits on the final cost after renovation when the final loan amount is complied and delivered from the lender.

Your cost can be as low as $5,000 on the renovation itself but there are basic requirements such as the house itself after renovation has to meet basic energy efficiency and structural standards.Minor or cosmetic repairs by themselves are unacceptable: however, they may be added to the minimum requirement.

You could do a total rebuild if you qualify, meaning you demolish the existing house and build your own right on that land as long as the existing foundation remains in place.

I know this is a dream kitchen for most of us:

Photo courtesy of and copyright Free Range Stock

Photo courtesy of and copyright Free Range Stock

There are a few things that are definitely excluded from the renovation costs such as exterior upgrades like pools or non-essential improvements in that category.

Here is a part of the list of what can be done in your renovation (courtesy of

A. Structural alterations and reconstruction (e.g., additions to the
structure, finished attics, repair of termite damage and the
treatment against termite infestation, etc.)
B. Changes for improved functions and modernization (e.g., remodeled
kitchens and bathrooms).
C. Elimination of health and safety hazards (including the
resolution of defective paint surfaces and/or lead-based paint
problems on homes built prior to 1978).
D. Changes for aesthetic appeal and elimination of obsolescence
(e.g., new exterior siding).
E. Reconditioning or replacement of plumbing (including connecting
to public water and/or sewer system), heating, air conditioning
and electrical systems.
F. Roofing, gutters and downspouts.
G. Flooring, tiling and carpeting.
H. Energy conservation improvements (e.g., new double pane windows,
insulation, solar domestic hot water systems, etc.).
I. Major landscape work and site improvement, patios and terraces
that improve the value of the property equal to the dollar amount
spent on the improvements or required to preserve the property
from erosion.
J. Improvements for accessibility to the Handicapped.
K. Related fixtures such as new cooking ranges, refrigerators and other
appurtenances, as well as general painting are also eligible, however,
it must be in addition to the $5,000 requirement.

Now that you have a better picture of how the FHA 203(k) Program could work in your favor, it might put getting the home you want within reach and at a cheaper cost than buying a completely finished, updated and upgraded home straight from the market.

If you have questions or want to know what’s on the market, click here to start your search St. Louis Real Estate

Feel free to call me Tamara Liggins @ 314.677.6104

Most importantly make sure you are choosing a lender that knows the program and can guarantee you results on financing.