203k Loan Pros and Cons

The Good and Bad Sides of 203K Loans

203K loans involve a complex and time-consuming process, but understanding the up- and downsides to them is well worth it if you’re a buyer who is taking on a fixer-upper. While we definitely recommend discussing this option with one of our qualified professionals before settling on any option, here is a little information to get you started:


  • Obviously, the best part of 203K Loans is that they allow borrowers to consider homes that will allow them to increase their investment through updates and improvements.
  • The buyer can access funds to make improvements with a loan they can tie into their home loan, rather than having to take out a second mortgage on the home.
  • They’re available to current homeowners who wish to refinance and remodel.
  • They can also be used to purchase appliances.
  • They allow the buyer to apply for their FHA loan before completing renovations.
  • Certain condominiums are also up for approval.


  • 203K loans are not available to investors—the loan must be procured by the individual homeowner.
  • Work cannot be done in a DIY fashion. While updates and repairs must be done by a professional, homeowners may do their own work, but may not collect payment for this work outside of the cost of materials. Other contractors may be subject to approval by the lender.
  • There are some very specific time restrictions involved, which may be a problem for some borrowers’ schedules (and when it comes to keeping contractors on schedule). Work must begin within 30 days of closing and be completed within six months. Make sure your contractor completely understands these limits before taking on any renovation funded by a 203K loan.
  • 203K loans are only available for use on a primary residence.
  • They are complex, containing copious amounts of paperwork, and they can take a great deal of time in comparison to home loans.