Best FHA 203(k) rehab mortgage lenders in 2021

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If you’re buying a home in need of some work, you can get the financing for both the purchase and renovation through an FHA 203(k) loan, also known as a rehab loan. This type of FHA loan keeps things simple with one loan, one set of closing costs and one monthly mortgage payment. Here is Bankrate’s guide to the best 203(k) rehab mortgage lenders in 2021.


To determine the best FHA 203(k) rehab mortgage lenders, Bankrate evaluated lenders based on several criteria, including affordability (APR and fees); scope of loan offerings; and online capabilities.

Best FHA 203(k) rehab mortgage lenders


LoanDepot offers some of the most competitive rates and a streamlined process, closing on loans as much as 50 percent faster than competitors. That’s in part because the lender uses asset verification technology instead of requiring borrowers to mail or fax documents.

While LoanDepot has online services, the lender also has 200 branch locations if you prefer to consult with a loan officer in person. For an FHA loan, it accepts a credit score as low as 580.

New American Funding

New American Funding offers a variety of mortgage products in 49 states (Hawaii being the exception) and Washington, D.C. One benefit of working with New American Funding is that the lender manually underwrites loans, taking a closer look at a borrower’s financial situation in a more holistic way instead of relying on automated underwriting. Because of this, if you have a lower credit score or unique circumstances, you could have a better chance of getting approved for a loan.

You can apply for a loan with New American Funding online or at one of the lender’s many branches.

Caliber Home Loans

Created in 2013, Caliber Home Loans is an online mortgage lender offering a range of loan products across the U.S. You can apply for a loan with this lender online or over the phone.

For FHA loans, the lender follows FHA guidelines. To improve your chances of getting approved for a loan, you might be able to submit additional documentation, such as your rental history, to prove creditworthiness. In general, you’re more likely to get approved if you have average to excellent credit.

What is an FHA 203(k) rehab loan?

The FHA 203(k) loan is a type of mortgage backed by the Federal Housing Administration for homebuyers looking to renovate the home they’re purchasing. 203(k) loans tend to come with more competitive rates, and require a smaller down payment and lower credit score compared to other kinds of loans. Like other FHA mortgages, 203(k) loans require you to pay a mortgage insurance premium with your monthly loan payment.

How does a 203(k) loan work?

A 203(k) loan bundles your mortgage and renovation funds into one loan. Once you close on the loan, a portion of the loan proceeds is paid to the seller of the home, and the remaining balance goes toward the renovations.

To be eligible for a 203(k) loan, the home needs to be at least one year old and renovation costs need to be a minimum of $5,000. In addition, the amount borrowed can’t be more than the area’s FHA loan limit, the home’s value after the renovation or its value before renovation, whichever is lowest.

You also can’t use a 203(k) loan for just any project. You’ll need to comply with the requirements for eligible renovations, which include replacing the roof and floors, enhancing the home for accessibility reasons or making energy efficiency improvements.

Who qualifies for a 203(k) loan?

If you’re interested in a 203(k) loan, you’ll need to meet the same requirements for a standard FHA loan:

  • A minimum credit score of 580
  • A debt-to-income (DTI) ratio of 50 percent or less (individual lenders may have higher or lower requirements)
  • The home is your primary residence and passes inspection once renovations are completed

Learn more:

Written by
Sarah Li Cain
Insurance Contributor
Sarah Li Cain is an experienced content marketing writer specializing in FinTech, credit, loans, personal finance,and banking. Her work has appeared in Fortune 500 companies, publications and startups such as Transferwise, Discover, Bankrate, Quicken Loans and KeyBank.
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