The Baltimore Maryland Agent: FHA 203K Renovation Loans

FHA 203K Renovation Loans

Are you a home buyer looking to minimize your out of pocket expenses? Is your target purchase price under $550,000? Did you find a great property in your price range that has an outdated kitchen and bathroom? Frequently home buyers and agents alike refer to these properties as "grandma's house". What this means is that the property has not been on the market in decades and the decor is completely out of sync.


                                      outdated interior in Baltimore Maryland



I'm a big fan of grandma's houses for two reasons; typically there is a pride of ownership that stems from a bygone era and often there is no debt on the property. Don't let the disconnect on the aesthetics keep you from pursing the property! The right way to buy grandma's house is with a FHA 203(k) Streamline loan. Going FHA 203(k) allows a purchaser to finance the home renovations as part of their purchase.


FHA 203(k) Streamline loans are for owner occupied properties only, although they do allow a purchase of a multi-unit property (4 unit maximum) so long as there is not a current lease and you intend to occupy one or more of the units as your primary residence.

The maximum of total renovation costs can not exceed $35,000 and these funds can not be used towards luxury items such as a pool. What you can do is upgrade appliances, systems, and finishes. The house can be acquired at a discounted purchase price and the funds can be issued to make it yours - all in one transaction.

Please note, self help is not allowed. What this means is that you can not do the renovation work on your own property. It needs to be completed by a licensed contractor. This fact is a great relief to many people who have spouses who "wing-it" at sub par renovation. No, this is not the time to teach yourself Electricity 101.

This will require a top notch agent, an experienced lender, a HUD Consultant, and a contractor familiar with FHA 203(k) renovation. I've got the contacts in Baltimore Maryland should you need them.


But what if the property requires structural repairs that will exceed $35,000? In that case you and the property may be a candidate for a Standard (also known as "full") FHA 203(k) loan. There is no $$$ limit to the amount of renovation.


How can we make this work? Up to six months in mortgage payments at the renovation property can be withheld while the work is being completed - allowing you to maintain your current residence so you do not have to live in a construction site.


The right way to buy grandma's house is with a FHA 203(k) streamline or standard loan. So many buyers forgo these properties because they'd rather find something turn-key. It may very well be that the property you love in the neighborhood you seek needs some upgrades. Instead of seeing this as a negative, consider the option that this may be an opportunity to have it renovated to your exact specifications.



Rachel Rabinowitz

Broker / Owner Guerilla Realty  and

Vice President Tranzon Fox Auctions

443.841.5916 direct /




Comment balloon 1 commentRachel Rabinowitz • August 01 2013 11:34AM


Good advice, important not to write off such hidden gems.

Posted by Li Read, Caring expertise...knowledge for you! (Sea to Sky Premier Properties (Salt Spring)) about 7 years ago