To qualify for a FHA 203K loan, applicants must meet the lender's credit requirements, which can vary from lender to lender, according to Realtor.com. Applicants must be able to make a down payment of a minimum 3.5 percent of the entire loan amount, as of 2015.
FHA 203K loan applicants must have a minimum 640 credit rating, a maximum debt-to-income ratio of 43 percent and pay mortgage insurance on the loan for at least 11 years. Since this type of loan includes home repairs, the mortgage payments are often higher, according to Realtor.com.
Only certain types of homes qualify for the FHA 203K loan, states Zillow. To qualify, the home must meet one of the following conditions: a one-to-four family home that has been completed for at least one year; a home that has been torn down, but still has a foundation; or a home that the buyer wants to relocate to another space.
Streamlined and traditional 203K programs exist, depending on the home repairs needed on the home. The streamlined program allows for up to $35,000 in repairs and does not include structural repairs, while the traditional program requires a minimum of $5,000 to address structural damages. Room additions, roof replacement, painting, new appliances, decks, patios, bathroom and kitchen remodels, flooring, exterior siding and HVAC installations are all qualifying repairs, according to Zillow. Adding luxury items such as a swimming pool are not included in the loan.