Andrade Real Estate Services

The FHA 203(K) Loan enables homebuyers and homeowners to finance both the purchase of a home and the cost of its rehabilitation, modernization, or repairs in one mortgage. It’s especially valuable for properties that may not meet standard FHA appraisal requirements due to their condition.

One Loan, One Closing – Combines purchase/refinance and rehab funds.
Low Down Payment – As little as 3.5%.
Flexible Credit – Borrowers with credit scores as low as 580 may qualify (600 required for manual UW).
After-Improved Value – Loan amounts based on the property’s value after repairs are complete.
Expanded Property Options – Works for fixer-uppers, HUD REOs, and properties needing major or cosmetic improvements.

Property Type	Credit Score	Min Down	Notes
SFR	580+	3.5%	N/A
2-4 units	580+	3.5%	HUD self-sufficiency applies on 3–4 units.
Condo	580+	3.5%	Condo must be FHA-approved.
Manufactures Home	580+	3.5%	Must be on permanent 433A foundation.

Occupancy Requirement
Primary residence Required — owner-occupied only. Investment or second homes are ineligible.
Military stationed > 100 miles away May qualify if a family member occupies the home, or the borrower intends to occupy upon discharge.

Improvements
Eligible Improvements Interior & exterior painting. Flooring, carpet, tile, or hardwood. Kitchen or bathroom remodels (non-structural). Energy efficiency upgrades (insulation, windows, doors). Roof repair or replacement. HVAC, plumbing, and electrical improvements. Appliance purchase and installation (built-in or freestanding). Health & safety repairs (lead-based paint, smoke detectors, carbon monoxide alarms).
Ineligible Improvements Structural changes or repairs (load-bearing walls, foundation work). Room additions or conversions (garage to living space, attic to bedroom). Luxury items (pools, hot tubs, outdoor kitchens, BBQ pits). Landscaping that is primarily aesthetic. Any work requiring architectural drawings or major engineering reports.

Program Requirements	Notes
Repair Limit	Up to $35,000 total (no minimum).
Work Start	Within 30 days of closing.
Work Completion	Must be finished within 6 months.
Contractors	Licensed contractor(s) required; DIY/sweat equity not permitted.
Escrows	Lender establishes a repair escrow account; disbursements made as work progresses.
Appraisal	Based on as-completed (after-improved) value.

Documentation
Contractor Bids Itemized and signed estimates required.
Borrower Acknowledgement Agreement on escrow and disbursement process.

Residency Eligibility
Eligible Valid SSN — must have a valid Social Security Number (SSN). Permanent residents — must provide a valid, unexpired Green Card.
Ineligible ITIN borrowers are not eligible. Non-permanent residents are ineligible. Foreign nationals are ineligible. Individuals with EAD (Employment Authorization Document) are not eligible. Individuals with work permits are not eligible.

Income Consistency Requirements
Employment History Two years of employment required, Same employer or continuous employment in the same line of work, Education or training may be used to fill gaps in history.
Notes Employment must be stable and in the same line of work, Frequent job changes are acceptable if income is stable or increasing and supported by documentation, Gaps over 6 months require explanation + current 6 months continuous employment, Education and training must be documented with transcripts, diploma, or certificate.

Income Type	Requirement	Documentation
Wage Earner	2 years stable employment history (gaps allowed if explained). Must show likelihood of continuance.	30 days paystubs + 2 years W-2s; VOE if required.
Self-Employed	2 years of self-employment required (1 year possible with ≥5 years prior work history in same field or relevant professional license.). Must demonstrate stable or increasing income.	2 years tax returns; YTD P&L; business bank statements if requested.
Part Time	2-year history required; must be likely to continue.	W-2s, paystubs, VOE verifying hours and history.
Seasonal	2-year history required; must be likely to continue.	W-2s, paystubs, VOE or employer letter confirming rehire pattern.
Social Security, Disability, and Retirement Income	Must be expected to continue ≥ 3 years.	Award/benefit letter (SSA, pension, disability) + proof of receipt (bank statements, 1099s, or deposits).
Alimony / Child Support	Must be court-ordered or written agreement; ≥ 3 years continuance.	Divorce decree, separation agreement, or order + 6 months proof of receipt.

Down Payment Funds
Eligible Sources Borrower’s own funds, Large deposits, Gift funds, CalHFA MyHome / ZIP / other DPA, GSFA Platinum / OpenDoors / other DPAs, Retirement (401k / IRA), Sale of assets.
Requirements 2 months of bank statements required to verify assets, Large deposits must be sourced if not payroll-related, Gift funds allowed with gift letter + proof of transfer (no seasoning required). DPA programs permitted if approved, Retirement funds require withdrawal terms + statements. Asset sales require bill of sale + proof of deposit.

Gift Funds
Eligible Donors Allowed for down payment and/or closing costs from acceptable sources such as: Spouse or domestic partner, Parent, step-parent, or foster parent, Child, step-child, foster child, or adopted child, Brother or sister, step-sibling, foster sibling, or adopted sibling, Grandparent, step-grandparent, foster grandparent, or grandchild, Aunt, uncle, niece, nephew, or cousin, In-laws, future in-laws, fiancé or fiancée, or ex-spouse, Charitable organization, Employer or Labor union, Government agency or public program, Seller only for a gift of equity and only when the seller is a family member.
Ineligible Donors Not allowed as sources of down payment or closing cost funds: Real estate agent, Loan originator or loan officer, Builder or contractor, Developer, Seller (except for family gift of equity).

Temporary Interest Rate Buydowns
Not allowed Not allowed on FHA Limited 203(k).
Note Borrowers must qualify at full note rate.

Loan Amounts
Loan Amount Lesser Of Purchase price + repair costs, or After-improved appraised value × 96.5%.
Maximum Loan Amount Must meet FHA county loan limits.

Non-Occupant Co-Borrowers
Eligibility Allowed for purchase and rate/term transactions.
LTV Limits & Exceptions If the non-occupant co-borrower is a family member and the property is a 1-unit home, the buyer can qualify with just 3.5% down. For all other non-occupant co-borrowers, a 25% down payment is required.

Property Types
Eligible SFR, 2–4 units, PUDS, FHA-approved condos, Manufactured Homes (doublewide or larger, built after 6/15/76, on a permanent foundation; moved homes allowed if DMV title is retired).
Ineligible Second homes, Investment properties, Manufactured Homes (Singlewide, or built before 6/15/76, or no permanent foundation, or parks with lot rent.), Condo Hotels or Motels (projects operated as hotel/motel, hotel/motel conversions), Commercial property, Vacant land or land development properties.

Self-Sufficiency (3–4 Units)
Requirement Net rental income from all units (including the borrower’s unit) must meet or exceed the property’s monthly PITIA.
Calculation Determined using HUD’s prescribed vacancy factor and rental income rules.

Multiple FHA Loans
General Policy Generally limited to one FHA loan at a time.
Exceptions Relocation to a new area, Increase in family size, Vacating a jointly-owned property, Disability needs, Employment transfer, Borrower is a non-occupant co-borrower on another FHA loan.

Seller Contributions
Maximum Contribution Up to 6% of the sales price.
Allowed Uses Closing costs, Prepaid items, Discount points, Origination fees.

Disclaimer – This matrix was published on 09/20/2025. Program guidelines may have changed since then. Please contact Alexis to confirm the most current requirements. For complete details, refer to the Partner Matrices PDF or reach out directly to Alexis for program-specific guidance.

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