Turn a Fixer-Upper into Your Dream Home
You found a home with great bones in a perfect location — but it needs work. A new kitchen, updated bathrooms, maybe a new roof. The problem? Most mortgages only cover the purchase price, and taking out a separate renovation loan means two closings, two sets of fees, and higher rates.
Enter the FHA 203k loan — a single mortgage that combines the purchase price and renovation costs into one loan with one monthly payment.
What Is an FHA 203k Loan?
The FHA 203k is a government-backed renovation mortgage that allows you to:
There are two types:
Limited 203k (formerly Streamline)
Standard 203k
What Can You Renovate?
Eligible Improvements
Not Eligible
How the Process Works
Step 1: Get Pre-Approved
Contact The Taberne Group for a 203k-specific pre-approval. We'll determine your maximum budget for both purchase and renovation.
Step 2: Find a Property
Work with your agent to find a home that needs work. Your pre-approval should reflect both the purchase price and estimated renovation costs.
Step 3: Get Contractor Bids
You'll need detailed bids from licensed contractors specifying the work, materials, and costs. For a Standard 203k, a HUD consultant will review and approve the work plan.
Step 4: Appraisal
The appraiser values the property based on its after-renovation value — meaning the home's estimated worth after all improvements are complete. This is key because your loan amount is based on this future value.
Step 5: Close and Renovate
At closing, renovation funds are placed in an escrow account. The contractor receives draws as work is completed and inspected. Typical renovation timeline: 3-6 months.
Step 6: Move In
Once renovations are complete and inspected, you're done. One loan, one monthly payment, and a home that's been updated to your specifications.
Running the Numbers
Example: Fixer-Upper in Bucks County, PA
Compare this to buying a move-in-ready comparable at $340,000:
By buying the fixer-upper with a 203k, you save $1,400 in down payment and $217/month while getting a home customized to your preferences.
Tips for a Successful 203k
1. Choose Experienced Contractors
Not all contractors are familiar with the 203k draw process. The Taberne Group can recommend contractors who have completed 203k projects before.
2. Build in Contingency
Add 10-15% contingency to your renovation budget for unexpected issues. Older homes often have surprises once walls are opened up.
3. Be Realistic About Timeline
203k renovations take time. Plan for a 3-6 month renovation period, and have a living arrangement for that time if the home isn't habitable during work.
4. Communicate with Your Team
The 203k process involves more parties than a standard purchase: contractor, HUD consultant (for Standard), appraiser, and your lender. Clear communication keeps everything on track.
5. Understand the Draw Process
Contractors don't get paid upfront. They complete phases of work, an inspector verifies completion, and then funds are released from escrow. This protects you from paying for unfinished work.
Where 203k Loans Shine in PA and NJ
The Philadelphia area and surrounding regions have incredible housing stock — older homes with great architecture and solid construction that just need updating. Some of the best 203k opportunities are in:
Ready to Build Your Vision?
The Taberne Group at Movement Mortgage is experienced in 203k renovation loans. We'll guide you through every step — from pre-approval to final inspection. Call us at (215) 266-0663 or start your application at movement.com. We serve homebuyers across Pennsylvania and New Jersey who want to turn potential into their perfect home.