What improvements are NOT eligible under the Standard 203(k)?

The Standard 203(k) Rehabilitation Mortgage Insurance Program mortgage proceeds may not be used to finance costs associated with the purchase or repair of any luxury item, any improvement that does not become a permanent part of the subject property, or improvements that solely benefit commercial functions within the property, including:
• recreational or luxury improvements, such as:

- swimming pools (existing swimming pools can be repaired)
- an exterior hot tub, spa, whirlpool bath, or sauna
- barbecue pits, outdoor fireplaces or hearths
- bath houses
- tennis courts
- satellite dishes
- tree surgery (except when eliminating an endangerment to existing improvements)
- photo murals
- gazebos; or

• additions or alterations to support commercial use or to equip or refurbish space for commercial use.

You may find an FHA-approved lender in your area using the Lender Locator at https://www.hud.gov/program_offices/housing/sfh/lender/lenderlist   The Lender Locator is not an all-inclusive list of lenders currently participating in a particular program such as HECM, 203(k), Title 1, etc.  Please contact the listed lenders to confirm their participation in each specific HUD/FHA program.  You can also find lenders in your area using your local telephone directory under the heading "Mortgages".

For additional information see Handbook 4000.1 II.A.8.a.vi(B) at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh


All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.


Topic Number: KA-02060