Home Rehab Loans (Section 203k)
Eligible Condos




Section 203(k) home rehab mortgages may be used for individual units in condominium (condo) projects that have been approved by FHA, the Department of Veterans Affairs, or are acceptable to Fannie Mae under the guidelines listed below.

The 203(k) rehab loan program was not intended to be a project mortgage insurance program, as large-scale development has considerably more risk than individual single-family mortgage insurance. Therefore, condo rehab is subject to the following conditions:

  • Owner/occupant and qualified non-profit borrowers only; no investors 
  • Rehab is limited only to the interior of the home -- mortgage proceeds are not to be used for the rehab of exteriors or other areas that are the responsibility of the condo association, except for the installation of firewalls in the attic for the unit
  • Only the lesser of five units per condo association, or 25 percent of the total number of units, can be undergoing rehabilitation at any one time 
  • The maximum mortgage amount cannot exceed 100 percent of after-improved value

After rehab is complete, the individual buildings within the condo must not contain more than four units. By law, Section 203(k) home rehab loans can only be used to rehab units in one-to-four unit structures. However, this does not mean that the condo project, as a whole, can only have four units or that all individual structures must be detached.

For example, a condo project might consist of six buildings each containing four units, for a total of 24 units in the project and, thus, be eligible for a Section 203(k) rehab loan. Likewise, a project could contain a row of more than four attached townhouses and be eligible for a rehab loan because HUD considers each townhouse as one structure, provided each unit is separated by a 1 1/2 hour firewall (from foundation up to the roof).

The condo project must be approved by HUD prior to the closing of any individual mortgages on the condo units.

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