Hallelujah! HUD finally updates, expands 203(k) program


The U.S. Department of Housing and Urban Development (HUD) on Tuesday announced that it has published updated policies for its 203(k) Rehabilitation Mortgage Insurance Program, in an effort to “modernize the program and enhance its usefulness for individuals and families seeking affordable financing for renovating or rehabilitating a single-family home when purchasing or refinancing it.”

The updates were announced by Federal Housing Administration (FHA) Commissioner Julia Gordon and Philadelphia Mayor Cherelle Parke at the home of a Philadelphia resident who used the program to renovate his home.

The 203(k) program allows the inclusion of repair or renovation costs inside a single mortgage used to purchase or refinance a home, and covers structural repairs (foundations and new roofs), modernization of kitchens and/or bathrooms as well as energy efficiency or climate resiliency projects.

HUD said that these new enhancements are “expected to meaningfully increase usage of the program and is an important component of the Biden-Harris Administration’s efforts to address the nation’s housing supply challenges,” according to HUD.

203(k) contains two separate programs: “standard” for substantial repairs, and “limited” for more minor repairs or renovations. Updates have been made to both variations.

These updates include increasing total allowable costs under the limited product from $35,000 to $75,000 along with an annual review of these totals to address the impacts of market conditions on costs; an extension of the rehabilitation period on both products, to 12 months on standard and nine months on limited; admitting the financing of a 203(k) consultant if a borrower elects to use one; and increasing the allowable fees a consultant can levy, the first update to such fees since 1995.

Gordon said that these updates were a long time coming.

“The changes we are announcing today for the 203(k) program are long overdue and will support greater use of this program where it is needed most – in neighborhoods where homes are affordable but need repair,” Gordon said. “Increased use of 203(k) mortgages will help modernize and revitalize homes, which supports affordable housing supply and strengthens neighborhoods.”

Simmons also described the utility of his own 203(k) loan.

“Thanks to this crucial program, I was able to make renovations to my home,” said Simmons. “I’m ecstatic to see that HUD and the Biden-Harris Administration are making improvements to enhance and expand this program, so thousands more homeowners can make fixes to their homes.”

“HUD has programs not only to help families purchase a house, but to help them repair their homes,” said Acting HUD Secretary Adrianne Todman. “Today, we are modernizing and expanding this program, helping both homebuyers and homeowners fix up their homes. This is one more action the HUD and the Biden-Harris Administration is taking to improve our country’s housing supply.”

Soon after the announcement, FHA released a mortgagee letter (ML) detailing the implementation of these updates to the 203(k) program. The ML detailed that the updates apply to all FHA case numbers assigned on or after Nov. 4, 2024.



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