203K Escrow Repair Loans

Learn about 203K escrow repair loans at our Loan Information Center
FHA loan program when $5000+ of repairs are needed.
Improvements eligible for Section 203(k) financing include:

  • Structural alterations and reconstruction (e.g., additions to the structure, finished attics, repair of termite damage and the treatment against termite infestation, etc.)
  • Changes for improved functions and modernization (e.g., remodeled kitchens and bathrooms)
  • Elimination of health and safety hazards (including the resolution of defective paint surfaces and/or lead-based paint problems on homes built prior to 1978)
  • Changes for aesthetic appeal and elimination of obsolescence (e.g., new exterior siding)
  • Recondition or replacement of plumbing (including connecting to public water and/or sewer system), heating, air conditioning and electrical systems
  • Roofing, gutters and downspouts
  • Flooring, tiling and carpeting
  • Energy conservation improvements (e.g., new double pane windows, insulation, solar domestic hot water systems, etc.)
  • Major landscape work and site improvement, patios and terraces that improve the value of the property equal to the dollar amount spent on the improvements or required to preserve the property from erosion
  • Improvements for accessibility to the Handicapped

When basic improvements are involved, the following costs can be included in addition to the minimum $5,000 requirement for the existing structure:

  • Construction or rehabilitation of a detached garage or an attached unit(s) to the existing dwelling (if allowed by the local zoning ordinances)
  • New cooking ranges, refrigerators and other appurtenances (used appliances are not eligible)
  • Interior or exterior painting

Ineligible Improvements:

  • Improvements that are not permanently attached to the property
  • Improvements for business or commercial use
  • Luxury items (see below)

Luxury items and improvements that do not become a permanent part of the real property are not eligible to be included into the rehabilitation. The repair, replacement, or the construction of the items listed below are not acceptable under the 203(k) program:

  • Barbecue pits; bathhouses; dumbwaiters; exterior hot tubs; saunas; spas and whirlpool baths; outdoor fireplaces or hearths; photo murals; swimming pools; television antennas and satellite dishes; tennis courts; tree surgery; additions or alterations to provide for commercial use or any other item that may be deemed unacceptable by the DE Underwriter or 203k consultant.

Note: All health, safety, and energy efficient items as per the appraiser must be addressed within the work write up and must be satisfactorily completed prior to AFR issuing the funds for the final draw.

Eligible Properties:

1-2 unit primary residences that have been completed for at least one year.


Required Improvements:

A. Cost Effective Energy Conservation Standards

B. Smoke Detectors
Each sleeping area must be provided with a minimum of one (1) approved, listed and labeled smoke detector installed adjacent to the sleeping area. The detector must sense visible or invisible particles of combustion. When activated, the detector must provide an alarm suitable to warn occupants within the sleeping area.
Smoke detectors may be battery powered when installing in existing or rehabilitated dwellings. However, where new construction is being added to an existing building, the smoke detector must receive its primary power from the building wiring, in conformance with local codes and ordinances.