HUD Updates 203(k) Rehabilitation Mortgage Insurance Program
The Department of Housing and Urban Development, through the Federal Housing Administration, updated policies for its 203(k) Rehabilitation Mortgage Insurance Program.
Officials say the updates modernize and enhance the program for homeowners looking to affordably finance home renovations and rehabilitations when purchasing or refinancing.
Assistant Secretary for Housing and Federal Housing Commissioner Julia Gordon and Philadelphia Mayor Cherelle Parker made the announcement at a home in Philadelphia, PA, with a borrower who used the FHA 203(k) program to finance renovations.
“HUD has programs not only to help families purchase a house, but to help them repair their homes,” said HUD Acting Secretary Adrianne Todman. “Today, we are modernizing and expanding this program, helping both homebuyers and homeowners fix up their homes. This is one more action the HUD and the Biden-Harris Administration is taking to improve our country’s housing supply.”
The 203(k) program lets borrowers finance the cost of rehab or repair in a single mortgage used to purchase or refinance a home. It offers room for structural repairs like foundations and new roofs, as well at kitchen and bathroom upgrades and energy-saving, climate-related projects.
Both the Standard 203(k) (for substantial changes to the home) and the Limited 203(k) (for minor remodeling and nonstructural repairs) are impacted by the changes.
HUD increased the allowable rehab costs a borrower can finance under the Limited 203(k) from $35,000 to $75,000, extended the time for work to be completed for both options, and introduced a new fee structure.
“The changes we are announcing today for the 203(k) program are long overdue and will support greater use of this program where it is needed most – in neighborhoods where homes are affordable but need repair,” said Gordon.
The Community Home Lenders of America supported the changes in a statement shared with HousingWire.
“CHLA is pleased with HUD’s announcement to expand the 230(k) program as it will greatly strengthen housing affordability measures, especially among first-time and low to moderate-income borrowers,” said Scott Olson, executive director.
“CHLA has been a strong advocate for expanding the FHA program’s scope to take into account cost advances. We are encouraged to see such enhancement initiatives, which make the program more attractive for homebuyers using FHA loans and contractors.”
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