The FHA's Section 203(k) program is the department's primary mortgage insurance program for the rehabilitation and repair of single family properties and is important for expanding homeownership opportunities. It is an excellent means for lenders to demonstrate their commitment to lending in lower income communities and to help to increasing homeownership opportunities for families who need money to fix up the house.
Mortgage proceeds must be used in part for rehabilitation and/or improvements
to a property. There is a minimum $5000 requirement for the eligible improvements on the existing structure. Any repair is acceptable in the first $5000 requirement that may affect the health and safety of the occupants. Minor or cosmetic repairs by themselves cannot be included in the first $5000, but may be added after the $5000 threshold is reached; such as: interior and exterior painting and even new appliances.
With a 203(k) you can:
1) remodel a kitchen or bath
2) add a family room or extra bedroom
3) make needed electrical or plumbing repairs
4) replace a leaky roof
5) make energy conservation improvements
6) repair a decaying foundation
7) convert a one-family home to a two-family home
8) improve handicap access
This may be your best way to buy a home below market value and remodel it to your desire with little money out of your pocket!