3 Differences Between the Limited and Standard 203(k) FHA Loans

Comparing home loans

You've found a home for sale in Albuquerque in the ideal neighborhood, and it's priced just right. But something is holding you back from making the deal.

Could it be the outdated appliances, dark brown exterior, and wall-to-wall carpeting? You can make it the home of your dreams with an FHA 203(k) renovation loan. This type of loan will let you buy the home and have extra cash to purchase appliances or make other improvements to the home. It's unique because you can borrow the funds you'll need based on what your house is expected to be worth after the renovation is complete.

The FHA 203(k) loan is insured by the Federal Housing Administration (FHA), and offers two options: Limited and Standard. Finding the one that's right for you depends on how much you want to spend and what you intend to do.

3 Differences between the Limited 203(k) and the Standard 203(k)
  • Structural Repairs
    • LIMITED: Minor remodeling and non-structural repairs.
    • STANDARD: Major rehabilitation or when repairs are structural or involve landscaping. Examples include jacking up your house to replace the sill plate or knocking the house down to rebuild it (you must leave the foundation).
  • HUD Consultant
    • LIMITED: Does not require a HUD consultant.
    • STANDARD: Requires the use of a HUD consultant. He will draw up the paperwork and work with you and your contractors to get a write-up before the appraisal and ensure the required renovation is completed. (Your loan officer can work with you to obtain the services of an experienced HUD-approved 203(k) consultant).
  • Cost
    • LIMITED: Total renovation costs cannot exceed $35,000. There are no minimum costs.
    • STANDARD: Your repairs and renovations can go above $35,000. There is a minimum repair cost of $5,000.
Eligible repairs you can make with a Limited 203(k)
  • Repairing or replacing the roof, gutters or downspouts
  • Repairing or replacing HVAC, heating, plumbing, or electrical systems
  • Repairing or replacing flooring
  • Minor remodeling
  • Indoor or outdoor painting
  • Replacing appliances
  • Accessibility upgrades
  • Abatement of lead-based paint
  • Repairing or replacing decks, patios, and porches
  • Waterproofing or finishing a basement
  • Weatherization
Eligible repairs you can make with a Standard 203(k)
  • Plumbing, electrical, heating, and cooling improvements
  • Structural changes
  • Storm shelter additions
  • Appliance and HVAC upgrades
  • Roofing alterations
  • Large landscaping and site improvements
  • Sewage and septic improvements
  • Site conversion (from a single unit to multi-unit property, for example)
  • Site relocation
  • Accessibility upgrades

This is a basic overview of the differences between the Standard and Limited 203(k) loan. Let us know if you want to learn more about how these loans can help you live in the perfect home in Albuquerque.