FHA 203(k) Loan 2026: Standard vs. Limited and When to Use Each

The FHA 203(k) is a purchase-and-renovation loan that wraps construction costs into a single FHA-insured mortgage. It exists in two versions: the Standard 203(k) for substantial rehabilitation including structural work, and the Limited 203(k) for cosmetic and non-structural repairs up to $75,000. The right version depends on the scope of work.

Limited 203(k) Rules

• ✦Maximum repair amount: $75,000 inclusive of contingency and fees
• ✦No structural work allowed (no load-bearing wall changes, foundation work, or room additions)
• ✦No HUD consultant required
• ✦Draw process: up to two draws, with first draw at closing and final draw after completion
• ✦Minimum FICO: 580 for 3.5% down; 500-579 requires 10% down
• ✦Work must begin within 30 days of closing and be completed within 6 months

Standard 203(k) Rules

• ✦No cap on repair costs above the minimum ($5,000)
• ✦Structural work is allowed: foundation repair, room additions, full gut renovations
• ✦HUD-approved 203(k) consultant required for all projects over $15,000
• ✦Up to 5 draws, typically with a third-party inspector verifying each completed phase
• ✦Same FICO and down payment thresholds as Limited: 580 for 3.5% down
• ✦Mortgage amount based on after-improved value, subject to FHA county loan limits

Eligible Property Types

Both versions are limited to 1-4 unit primary residences. Condos are eligible for the Limited version only, and only if the condo project is FHA-approved. Mixed-use properties with commercial space are ineligible. The property must have been completed for at least one year prior to application.

Common Overlays to Know

Many lenders overlay tighter FICO floors on 203(k) compared to standard FHA. A 640 or 660 minimum is common. Fewer lenders offer Standard 203(k) than Limited due to the consultant and draw complexity. If your borrower needs structural work, confirm your lender actually offers the Standard version before taking application.