An FHA 203(k) rehab mortgage is a unique loan program designed to help buyers purchase and renovate a home with a single loan. Insured by the Federal Housing Administration (FHA), this mortgage combines the home’s purchase price with the estimated costs of repairs or improvements, making it ideal for properties that need some work to become livable or meet the buyer's vision. It’s a popular option for buyers looking to turn fixer-uppers into their dream homes or investors aiming to restore properties for resale.

There are two types of FHA 203(k) loans: Standard 203(k) and Limited 203(k). The Standard version is best for significant structural repairs or major renovations, while the Limited option is designed for smaller projects, such as updating kitchens, replacing flooring, or fixing roofs. To qualify, borrowers need to meet standard FHA loan requirements, including a minimum credit score and down payment. Renovation funds are placed in an escrow account and disbursed to contractors as work progresses. With an FHA 203(k) loan, buyers can finance both their home and its transformation in one affordable package, opening doors to opportunities that traditional loans might not support.