Home Rehab Loans (Section 203k)
Application Process


Once you find the property that you wish to purchase (and conduct a preliminary feasibility analysis with your real estate professional), or if you are already living in the residence you plan to rehab, you should find a HUD-approved lender who will help you understand the next steps and details of 203(k) rehab loans.

Because many borrowers need professional help in determining needed repairs or improvements, your lender will assign a 203(k) consultant to assist you in planning the work and developing cost estimates. The consultant will perform the home inspection, identify needed repairs or improvements, including health and safety problems, and provide a work write-up and cost estimate to you.

You also can contact a HUD-approved housing counseling agency for more information about the rehab loan program.

This following describes a typical step-by-step application/mortgage origination process for a transaction involving the purchase and rehab of a home. It explains the role of HUD, the mortgage lender, the contractor, the borrower, consultant, the plan reviewer, appraiser and the inspector.


  1. Homebuyer Locates the Property
  2. Preliminary Feasibility Analysis
    After the property is located, the homebuyer and their realtor should make a marketability analysis prior to signing the sales contract to determine:

    • The extent of the rehab work required
    • The rough cost estimate of the work
    • The expected market value of the property after completion of the work (the borrower does not want to spend money for appraisals and repair plans and then discover that the value of the property will be less than the purchase price or existing indebtedness, plus the cost of improvement

  3. Sales Contract is Executed
    A provision should be included in the sales contract that the buyer has applied for Section 203(k) financing, and that the contract is contingent upon loan approval and the buyer's acceptance of additional required improvements as determined by HUD or the lender.
  4. Homebuyer Selects Mortgage Lender
  5. Homebuyer Prepares Work Write-up and Cost Estimate
    A consultant can help the buyer prepare the exhibits to speed up the loan process. If a plan reviewer is the consultant, step 7 can be skipped and the exhibits can go directly to the appraisal stage.
  6. Lender Requests HUD Case Number
    Upon acceptance of the architectural exhibits, the lender requests the assignment of a HUD case number, the plan reviewer, appraiser, and the inspector.
  7. Plan Reviewer Visits Property
    The homebuyer and contractor (where applicable) meet with the plan reviewer to ensure that the architectural exhibits are acceptable and that all program requirements have been properly shown on the exhibits.
  8. Appraiser Performs the Appraisal
  9. Lender Reviews the Application
    The appraisal is reviewed to determine the maximum insurable mortgage amount for the property.
  10. Issuance of Conditional Commitment / Statement of Appraised Value
    This statement is issued by the lender and establishes the maximum insurable mortgage amount for the property.
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