FHA 203(k) Home Loans for Disaster Recovery

Home loans for disaster recovery are a great way to get funded by the government through an FHA 203(k) loan. Planning on buying an old house in order renovate or remodel it as your permanent residence? then there’s a chance. You may not want to fall back on your savings and it might not go a long way to get you that new home you desired so much. What’s the alternative? FHA 203(k) loans.

What is an FHA 203(k) Loan?

FHA 203(k) loans are also known as FHA construction loan. These are a type of loan that are issued by the government and they are used to cover home purchase as well as the cost of renovating a home. If you decide you want a house but you can’t afford a new one, there may be a home that is in dire need of improvement. As such, the government can issue funds to you to acquire and even take it one step further by giving you the funds you need to renovate it.

How Does an FHA 203(k) Loan Work?

Low and middle-class income earners have been given an offer by the government and that is to obtain an FHA 203(k) mortgage. The purpose is to use the funding in purchasing a home which may not be looking great at the moment but can be renovated to improve its look. An interest rate for such a loan may be fixed or variable.

While this loan is open to the public, it is only for families who are willing to make the place their permanent resident and as such, the loan application will not be approved for investors such as home flippers. Therefore, if you’re looking for a loan which you help you renovate to sell back in the market for some extra cash, this is not it.

The purpose of this loan in the first place is to ensure that all the cost required for the home is covered. From its renovation to the supply of tools that will be required by a licensed handyman to do the job. As such, this takes away the need for a borrower to request for a separate home improvement loan after the FHA 203(k).

Types of 203(k) Loans

FHA 203(k) are basically of two types and these are the streamline 203(k) and standard 203(k).

1. Streamline 201(k): Minimal Repairs:

If the repairs to be carried out on the house is minimal, then a loan which does not go beyond $35,000 can be borrowed, These are homes that can still be lived in while the renovation is ongoing and as such, they are not that serious. By serious, we mean the addition of a new room or renovating the entire kitchen.

2. Standard 203(k) to Handle Extensive Work:

What if you’ll like to do something more extreme to the purchased home? then here’s where the Standard 203(k) comes to play. There is no limitation as to how much you can borrow unlike the case of streamline and the minimum you can obtain is $5,000. 

After obtaining the loan, you can carry out work such as window and door replacements, painting, flooring, plumbing, kitchen remodeling, energy conservation systems addition, bathroom remodeling, and several others. Alternatively, you may be tempted to add a pool or balcony, but these are considered as luxurious renovation which could get your loan application rejected.

How to Get an FHA 203(k) Loan

FHA is the mortgage insurer of the loan you’re going to apply for, hence, they are not the direct lenders. Therefore, to get this loan, an application has to be submitted to your bank, a lender, or credit union. Each of these must be approved by the FHA to issue such loans and you can check this┬álist┬áto see the platforms that have been approved by the insurer.


Home loans for disaster recovery can help you be a proud owner of a home if that’s what you’re looking forward to. It could be more cost-effective in comparison with buying a brand new house off the market. Buy an old one, renovate it, and it could just look good as new. And all this begins with an FHA 203 (k) Loan.

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