What property types are eligible for 203(k) financing?

For a property to be eligible under the Section 203(k) Rehabilitation Mortgage Insurance Program program, the property must be an existing property that has been completed for at least one year prior to the case number assignment date.

The following property types may be eligible under the Section 203(k) program :
• a one- to four-unit Single Family Structure;
• an individual condominium unit, meeting the following requirements:
- the unit must be located in an FHA-approved Condominium Project and must comply with all other requirements for condominiums;
- rehabilitation or improvements are limited to the interior of the unit, except for the installation of firewalls in the attic for the unit;
- no more than five units per condominium association, or 25 percent of the total number of units, whichever is less, can undergo rehabilitation at any time; and
- after rehabilitation is complete, the unit is located in a structure containing no more than four units. For townhouse style condominiums, each townhouse is considered as one structure, provided each unit is separated by a one and one-half hour firewall from foundation to roof;
• a site condominium unit;
• manufactured housing where the rehabilitation does not affect the structural components of the structure that were designed and constructed in conformance with the Federal Manufactured Home Construction and Safety Standards and must comply with all other requirements for manufactured housing;
• a mixed use property with one- to four-residential units, provided:
- 51 percent of the gross building area (GBA) is for residential use; and
- commercial use will not affect the health and safety of the occupants of the residential property; and
• a HUD Real Estate Owned (REO) Property if:
- the property is identified as eligible for 203(k) financing as evidenced in the sales contract or addendum. Investor purchases of HUD REO properties are not eligible for 203(k) financing.

For additional information see Handbook 4000.1 II.A.8.a.iii. at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh
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US Department of Housing and Urban Development

Topic Information
  • Topic #: 57345-7935
  • Date Created: 11/19/2015
  • Last Modified Since: 12/05/2017
  • Viewed: 836