FHA 203(k) Renovation Mortgage Programs

If you are a DIY-er, CHFA understands that your dream home may not be move-in ready. FHA 203(k) Rehabilitation mortgages allow first-time homebuyers to take advantage of below-market interest rate loans that cover costs of purchasing and making full or limited renovations to your dream home. This program may also be used to finance abandoned or foreclosed properties. There are two types of loans, Standard or Limited, depending on the estimated cost of renovations.

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  Benefits

  • Below-market interest rate. 
  • Purchase your home with the cost of renovations included! 

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  Eligible Properties

  • Single-family homes or FHA-approved Condominiums. 
  • Multi-unit properties to be converted into two- to four-family homes. 
  • The purchased property may not be designed for commercial purposes.

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  Eligibility Requirements

  • You must be a first-time homebuyer or have not owned a home in the past three years. 
  • The home must become your primary residence no later than one year from closing. Investment or vacation properties are not allowed. 
  • The total purchase cost and rehabilitation costs must not exceed FHA Maximum Loan Limits.
  • You will be required to have a construction contract with a state-licensed general contractor.
  • The sales price of the home must be within the CHFA Sales Price Limits, and your gross income must be within the CHFA Income Limits.  The CHFA Resource Map can tell you if you are within program eligibility limits.    

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  Renovations Covered Include:

  • Electrical
  • HVAC systems
  • Purchase new appliances (up to $2,000)
  • Roofs
  • Satisfy health and safety standards
  • Sewer hookup
  • Well and septic systems

  Any repairs that are structural in nature or in excess of $35,000 will be considered under the Standard 203(k) Rehabilitation program.

• Targeted Area Exception

  If you have owned a home in the past three years, you may still be eligible if you plan to purchase in a targeted area, which are communities targeted by the federal government for revitalization. CHFA will reduce your interest rate by 0.25% and waive the income limit for eligible applicants purchasing in Targeted Areas who are not applying for a Downpayment Assistance Program loan.

• Downpayment Assistance Program (DAP) Loan

  You may qualify for a reduced-interest rate loan of at least $3,000 to help pay for the down payment and closing costs.  Applicants will be required to make a minimum investment of $1,000 towards the acquisition costs.  A DAP loan is a second mortgage on your home. Eligible borrowers must show the ability to repay the primary mortgage and the DAP loan in order to qualify for assistance under this program.

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  Additional Considerations

  • You will be required to attend a free Homebuyer Education  class prior to closing. The class will help you understand the home-buying process and offer tips for maintaining your new home. Classes are held online and at locations across Connecticut. 
  • Federal Housing Administration (FHA), Veteran Administration (VA) or USDA-(RD) mortgage insurance will be required.  
  • After closing on your loan, the funds for home repairs will be held by your lender in a separate escrow account. Your lender will handle all payments to the contractor and manage a contingency reserve of up to 20% of the rehabilitation costs. Any unused funds will be applied to the principal balance of your loan. 

To apply for the 203(k) Rehabilitation Mortgage Program contact one of these CHFA- Approved Lenders: