What improvements are eligible under the Limited 203(k)?

The Limited 203(k) Rehabilitation Mortgage Insurance Program may only be used for minor remodeling and non-structural repairs. The total rehabilitation cost may not exceed $35,000. There is no minimum repair cost.

Eligible improvement types include, but are not limited to:
• eliminating health and safety hazards that would violate HUD's Minimum Property Requirements (MPR);
• repairing or replacing wells and/or septic systems;
• connecting to public water and sewage systems;
• repairing/replacing plumbing, heating, AC and electrical systems;
• making changes for improved functions and modernization;
• eliminating obsolescence;
• repairing or installing new roofing, provided the structural integrity of the structure will not be impacted by the work being performed; siding; gutters; and downspouts;
• making energy conservation improvements;
• creating accessibility for persons with disabilities;
• installing or repairing fences, walkways, and driveways;
• installing a new refrigerator, cooktop, oven, dishwasher, built-in microwave oven and washer/dryer;
• repairing or removing an in-ground swimming pool;
• installing smoke detectors;
• installing, replacing or repairing exterior decks, patios, and porches; and
• covering lead-based paint stabilization costs (above and beyond what is paid for by HUD when it sells REO properties) if the structure was built before 1978, in accordance with the Single Family mortgage insurance lead-based paint rule and EPA’s Renovation, Repair, and Painting Rule.

All improvements to existing structures must comply with HUD’s MPR.

Patios and decks must increase the As-Is property value equal to the dollar amount spent on the improvements.

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.vii.(A) 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-02066