Improving the FHA 203K

Written By: Bonnie Wilt-Hild

Just when you think things couldn’t possibly get any better, they do. I am talking about HUD’s 203k program and their plans to implement changes to the program to provide for a more user-friendly program that will meet the needs of the current market which as we all know seems to be driven by foreclosure and short sales, so the timing couldn’t be any more perfect.

For those of you who have not yet begun participating in the program because it seems to be a bit complicated I am here to tell you that it isn’t once you understand program guidelines and quite frankly, once you have underwritten a few you will develop quite a love affair with them. Even under the current guidelines they are my favorite program to underwrite and I can assure you guidelines have gotten easier and easier over the past 20 years including the implementation of the streamline 203k in 2005 which doesn’t even require the use of a 203k consultant. So with HUD’s intention to modify the program as so to create more apparent guidelines which industry professionals may find more manageable, I thought I would again reiterate why this program rocks!

First it is important to recognize that the 203k may be completed one of two way, these being as a Standard 203k which is for rehabilitation pieces greater than $35,000 or that may contain structural alterations to the subject property or as a Streamline 203k which would be completed for rehabilitation pieces less than $35,000 which include no structural alterations to the property. The standard 203k involves a greater knowledge of the programs as some of the rehabilitation pieces can be as large as a complete renovation of a property, adding additions or in cases an entire second floor.

They involve the use of an FHA 203k consultant who will complete on the borrowers behalf the specification of repairs sometimes referred to as the work write up and many times you will find that you will need additional supporting documentation such as location surveys or plot plans as well as architectural exhibits or maybe engineer certifications and plans for things such as the under pinning of a foundation (yea I know) or blue line plans for a large addition. Not going to lie, these take a little longer to process and underwrite but if you make sure everyone is on the same page and they are staged correctly from the beginning, they should move pretty smoothly.

The streamline k is exactly what it implies, a streamlined version of the standard 203k. The renovation piece is much smaller as it can’t exceed $35,000 or involve structural alterations to the property. This program has gained a tremendous amount of popularity lately because it works extremely well with foreclosed properties which may require limited repairs in order to bring it up to HUD minimum property standards. Additionally, the repairs are completed after closing with the rehabilitation funds provided in the loan amount and escrowed by the lender.

Additionally, HUD will allow the disbursement of 50% of the rehabilitation escrow at closing so that the borrower’s contractor may purchase the materials necessary to complete the rehabilitation and like I said, it’s going to get better. For those of you industry professionals out there who would like to participate or provide input as to how much more user-friendly the program will become, you are invited to do so by HUD. I have attached the HUD flyer as well as the link for registration below which invites industry professionals with knowledge of the program to participate in a 203k discussion meeting which will allow the industry professionals utilizing the program to provide their input as well as discuss operational best practices. The meeting will be held in Washington DC on November 15 and as you can imagine, I will be there.

Hope to see those of you who value this program as much as I do. Registration is required and space is limited so if you want to participate don’t waste time registering. Have a great week all!

For More Information on the FHA Home Rehabilitation Progrom 203 Discussion Meeting go to

About The Author

Bonnie Wilt-Hild - As an NAMP® staff writer, Bonnie currently serves as a senior instructor for FHA Online University ( as well maintains a full-time mortgage underwriting position as the Senior FHA DE Underwriter for a major lending institution. With over 25+ years of senior-level FHA/VA Government underwriting experience, Bonnie is considered the "Queen of FHA Loans". If you're interested in becoming a writer for NAMP®, please email us at:


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