“Truly Understanding FHA 203 K Loans”

“Truly Understanding FHA 203 K Loans”




I often get calls from folks that contact me after reading a blog or find my name on the FHA website. The 203 K business is being done by fewer and fewer banks, credit unions and other lenders. It is very easy to screw them up or have situations where the loan officers just don’t have a clue on how to do them.


These loans just plain take longer as there are hoops that other loans just don’t have, but in most cases it is a wonderful way to literally create instant equity. Here is an example:


I’m doing a loan for Lynda, she has a contract to buy a home for $83,000 and the renovation costs will be just under $30,000. When the appraisal was done the value came in at $146,000. Now that is what I call instant equity.


It is important to work with someone that knows what they are doing otherwise an already challenging loan becomes almost impossible.


Below is an email from a prospective client that has been communicating via email but is now ready to meet to get pre-qualified, as she has a home in mind:


That’s great news, are there any restrictions as to what that can be used for? This house has ice damage to the pipes for the water system. I'm trying to figure out what percent of the plumbing needs to be done, I just wanted to make sure the 203k would still be allowed in this situation.


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Joe Petrowsky, NMLS #6869

Right Trac Financial Group, Inc. NMLS #2709

110 Main St.

Manchester, Ct. 06042

Office: 860 647-7701 x116

Fax: 860 647-8940

Cell: 860 836-9294

Email: joe@righttracfg.com



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Joe Petrowsky does not guarantee nor is in any way responsible for the accuracy of the information provided herein, and provides said information without warranties of any kind, either expressed or implied.

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Comment balloon 28 commentsJoe Petrowsky • November 02 2015 11:11AM


Joe: Working with knowledgeable professionals like yourself can make all the difference for real estate consumers.

Posted by Anita Clark, Realtor - Homes for Sale in Warner Robins GA (Coldwell Banker Access Realty ~ 478.960.8055) about 5 years ago

Good morning Joe. Using a knowledgeable loan officer is always key to a smooth transaction. When it comes to FHA and VA, it is essential! Enjoy your day!

Posted by Wayne Martin, Real Estate Broker - Retired (Wayne M Martin) about 5 years ago

Hi Joe.  So many real estate agents don't have a clue how 203k loans create this instant equity.

Posted by Conrad Allen, Webster, Ma, Realtor (Re/Max Professional Associates) about 5 years ago

Good morning, Joe --- finding the right lender and the right product is critical to a successful outcome.   Your knowledge helps make that happen.  

Posted by Michael Jacobs, Los Angeles Pasadena 818.516.4393 about 5 years ago

The FHA 203(k) program is wonderful for the purchase properties that need renovation. 

Posted by Roy Kelley (Realty Group Referrals) about 5 years ago

It is important for home buyers to go to a lender who understands fha 203k lonas if they are thinking of buying a house using this program.

Posted by Gita Bantwal, REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel (RE/MAX Centre Realtors) about 5 years ago

Yes, Joe.  I love these loans and they make so much sense.  It's a shame that more people don't have the vision for such homes and the process.

Posted by Gabe Sanders, Stuart Florida Real Estate (Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales) about 5 years ago

It's all about being a true professional who can really help to make the magic happen!

Posted by Lawrence "Larry" & Sheila Agranoff. Cell: 631-805-4400, Long Island Home and Condo Specialists (The Top Team @ Charles Rutenberg Realty 255 Executive Dr, Plainview NY 11803) about 5 years ago

Anyone working with Joe Petrowsky should count themselves lucky. This lender knows his field!

Posted by Lise Howe, Assoc. Broker in DC, MD, VA and attorney in DC (Keller Williams Capital Properties) about 5 years ago

Joe Petrowsky If anyone can keep this loan product alive; it is you. I am sure there are so many older homes or similar to the one mentioned at the end of your blog that are worthy subjects for a 203 K. Thanks!

Posted by Sandy Padula and Norm Padula, JD, GRI, Presence, Persistence & Perseverance (HomeSmart Realty West & Lend Smart Mortgage, Llc.) about 5 years ago

Good morning Joe,

Yes a good loan officer helps and the agent also must have knowledge to help write the offer.

Make yourself a great day.

Posted by Raymond E. Camp, Licensed Real Estate Salesperson Greater Rochester (Howard Hanna Real Estate Services) about 5 years ago

Good morning Joe Petrowsky,

I think Sandy Padula and Norm Padula, JD, GRI is right: " If anyone can keep this loan product alive; it is you." The FHA 203(k) program is wonderful for the purchasing properties that need renovation. More agents need to understand this program so they can help customers who would like to utilize this loan product. Thanks for the story this morning.

Posted by Dorie Dillard CRS GRI ABR, Serving Buyers & Sellers in NW Austin Real Estate (Coldwell Banker Realty ~ 512.750.6899) about 5 years ago

Good morning Joe.  You are right in that many of the loan officers do not do the 203K's anymore.  There are a few around here but not many.  

Posted by James Dray, Exceptional Agents, Outstanding Results (Fathom Realty) about 5 years ago

Smart folks who use them...few lenders want to "get involved"...we have worked with them...it helps to have the lender, realtor and buyer have an understanding of what is involved and GET involved.

Posted by Sally K. & David L. Hanson, WI Real Estate Agents - Luxury - Divorce (EXP Realty 414-525-0563) about 5 years ago

Joe, you're the man in the know and always advise your clients with their best interest in mind.

Posted by Roger D. Mucci, Lets shake things up at your home today! (Shaken...with a Twist 216.633.2092) about 5 years ago

Good morning Joe. It is always important to work with folks who understand what they are doing.

Posted by Sheila Anderson, The Real Estate Whisperer Who Listens 732-715-1133 (Referral Group Incorporated) about 5 years ago

Good morning, Joe... 203K loans are great in the right circumstance, but I've learned you really do need to work with a lender and contractor who know their way around this product!

Posted by Nina Hollander, Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor (Coldwell Banker Realty) about 5 years ago

I think what most people would like to know is:

1. What kind of appraisal has to be done in order to produce the "after-value" appraisal to support the issuance of the renovation funds?

2. How is the money disbursed after closing upon completion of the work, and what are the guidelines for that?

Posted by Ralph Gorgoglione, Hawaii and California Real Estate (310) 497-9407 (Maui Life Homes / Metro Life Homes) about 5 years ago

Joe Petrowsky , knowledge is power. You're knowledge of the 203(k) loan process is certainly power for the buyer who is savvy enough to shine a diamond in the rough.
Thanks for sharing,


Posted by Bruce Kunz, REALTOR®, Brick & Howell NJ Homes for Sale (C21 Solid Gold Realty, Brick, NJ, 732-920-2100) about 5 years ago

 I have only had 1 client that did a 203K and they were so upset as they wanted a relative to do the work and they weren't state licensed.

Posted by Ed Silva, Central CT Real Estate Broker Serving all equally (Mapleridge Realty, CT 203-206-0754 ) about 5 years ago

Joe I feel about the 203K loans the same way you feel about  the CHFA loans, so I will send you the 203K's and you send me the CHFA's :) :) :)

Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) about 5 years ago

I always learn something from your blogs Joe, thanks for taking the time.

Posted by Noah Seidenberg, Chicagoland and Suburbs (800) 858-7917 (Coldwell Banker) about 5 years ago

If done right, a 203K loan can be a great repair cost solution.

Posted by DEANNA C. SMITH CERTIFIED MOBILE NOTARY, Highest Ranked Certified Mobile Notary in Virginia (Certified Mobile Notary Signing Agent) about 5 years ago


Getting a 203K FHA mortgage closed . . . . takes have a knowledgeable mortgage broker.

Good luck and success.

Lou Ludwig

Posted by Lou Ludwig, Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC (Ludwig & Associates) about 5 years ago

Hi, Joe. I have worked with buyers doing the 203K rehab loan. I guess lenders in my area don't have much experience with them. Each situation was a lending nightmare. 

Posted by Debbie Laity, Your Real Estate Resource for Delta County, CO (Cedaredge Land Company) about 5 years ago

Joe this is such a good program too bad many people do not know how to take advantage of it... once you are done you have instant equity in your home...Endre

Posted by Endre Barath, Jr., Realtor - Los Angeles Home Sales 310.486.1002 (Berkshire Hathaway HomeServices) about 5 years ago

I showed clients a foreclosure this weekend that was a perfect candidate for 203K. They just couldn't wrap their minds around it. It would be great if you would do a follow up (and tag me) and include a few more details, like Ralph Gorgoglione mentioned. Thanks, Joe!

Posted by Pat Starnes-Front Gate Realty, 601-991-2900 Office; 601-278-4513 Cell (Front Gate Real Estate) about 5 years ago

Truer words were never spoken in the mortgage industry. I have done 2 of these loans over my career, and they were about the most memorable. Great article, as usual!!

Posted by Mark Daly (Group One Mortgage) about 5 years ago