Loan options help you borrow the right amount.

A 203(k) loan is an FHA-backed loan that can be used to refinance an existing home with added money for repairs, updates, or renovations. There are two types to choose from, depending on your needs.

Limited 203(k) renovation loan

The Limited 203(k) program is intended to facilitate uncomplicated rehabilitation and/or improvements to a home for which plans, consultants, engineers, and/or architects are not required. The maximum repair amount is $35,000, with no minimum requirement for repairs.

Standard 203(k) renovation loan

The Standard 203(k) program is intended to assist with more complex, major rehabilitation and/or improvements to a home for which plans, consultants, engineers, and/or architects are often required. There is no maximum repair amount, though there is a $5,000 minimum requirement for repairs.

Pros:

• No equity is necessary.
• The loan allows you to stay with one mortgage and one payment.
• There’s no minimum renovation for Limited 203(k).
• Structural repairs are OK with Standard 203(k).

Cons:

• No do-it-yourself work is allowed, and contractors must be vetted.
• The loan can be applied to a primary residence only.
• A down payment is required.
• There’s a lot of paperwork.