U.S. Department of Housing and Urban Development
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203(k) REHABILITATION MORTGAGE INSURANCE PROGRAM
Section 203(k) insures mortgages covering the purchase or refinancing and rehabilitation of a home that is at least a year old. A portion of the loan proceeds are used to pay the seller, or, if a refinance, to pay off the existing mortgage, and the remaining funds are placed in an escrow account and released when the rehabilitation is completed. Section 203(k) offers:
- a solution that helps both borrowers and lenders, insuring a single, long term, fixed or adjustable-rate loan that covers the acquisition and rehabilitation of a property.
- affordability and flexibility of FHA-insured financing.
- the lender protection by allowing them to have the loan insured prior to completion of rehabilitation, even before the condition and value of the property may offer adequate security.
- the lender the opportunity to help address climate change by insuring the financing of cost-effective energy efficient improvements**.**