FHA 203(k) Renovation Refinance: Upgrade Your Home—and Your Loan—With One Easy Move

  • Tags: Calculators, New Construction, Spec Homes

Already own a home but need major repairs or upgrades? The FHA 203(k) Renovation Refinance allows you to refinance your current mortgage and fund renovations in a single loan—all with just one monthly payment and as little as 3.5% equity.

Let’s walk through how the FHA 203(k) Refinance Calculator helps you estimate your monthly payment, loan structure, and total out-of-pocket cost (which may even be $0 in some cases).

Step 1: Your Project Overview

Here’s a sample scenario:

  • Current Loan Balance: $200,000
  • Renovation Budget: $100,000
  • “As-Is” Home Value: $300,000
  • After Repair Value (ARV): $400,000
  • New Loan Term: 30 years
  • Estimated Interest Rate: 7%
  • Monthly Taxes and Insurance: $500
  • HOA: $0

Step 2: Know the Loan Structure

Your total project cost includes the current mortgage payoff, renovation budget, and a 10% contingency reserve to cover unexpected costs:

  • Total Property Costs: $310,000
  • Estimated Closing Costs (4%): ~$12,000
  • Total Financeable Costs: $312,000

FHA allows you to borrow up to 110% of ARV (subject to HUD county loan limits). In this case:

  • Maximum Loan Allowed: $440,000
  • Desired Loan Amount (base): $312,000
  • Upfront Mortgage Insurance Premium (UFMIP @ 1.75%): $5,460
  • Final Loan Amount (Financed Total): $317,460

Step 3: Monthly Payment Breakdown

Here’s your estimated all-in housing expense:

  • Principal & Interest (P&I): $2,112
  • Taxes & Insurance: $500
  • FHA Monthly Mortgage Insurance (MI): $198
  • Total Monthly Payment: $2,810

This is a complete payment—everything bundled into one line-item. Even during the renovation phase, you won’t make multiple payments.

Step 4: Out-of-Pocket Cost

  • Estimated Cash to Close: $0
    You may qualify for lender credits to cover your closing costs, especially if you choose a slightly higher interest rate.

This means you can renovate and refinance with no upfront cash, preserving your savings while still upgrading your home.

Step 5: Income Needed to Qualify

FHA allows flexible qualifying ratios:

  • Target Monthly Income: $5,621
    Based on 43% debt-to-income (DTI), though borrowers with compensating factors (e.g., cash reserves or strong credit) can be approved at up to 50%.

Important Notes:

  • Non-borrowing spouse income can’t be used, but their debt must be included in community property states.
  • You’ll need contractor bids and may require a HUD consultant depending on the renovation scope.

Why Choose an FHA 203(k) Refinance?

No need for a second mortgage or HELOC
Finance repairs, updates, even structural work
Keep one fixed monthly payment
Bundle in closing costs and reserves
Build equity while improving your living space

Whether you’re upgrading your kitchen, installing energy-efficient features, or correcting safety issues, this is one of the most affordable and streamlined ways to improve your home and financial position at the same time.

Final Thoughts

If you’ve been putting off needed repairs or dreaming of renovations, the FHA 203(k) refinance loan can make it happen. By refinancing and renovating at once, you can improve your home’s value, increase equity, and lock in one affordable monthly payment—all without draining your savings.

Ready to Get Started?

We’ll help you run your numbers, review your renovation goals, and guide you through contractor approvals and HUD guidelines—so your project gets funded fast and stress-free.

Ready to Take Your First Step?

Skip the guesswork. Take our quick Discovery Quiz to uncover your top financial priorities, so we can guide you toward the wealth-building strategies that fit your life.

  • 💡 Takes just 5 minutes
  • 📊 Tailored results based on your answers
  • 🔒 No credit check required
Take the Discovery Quiz

Need a Pre-Approval Letter—Fast?

Buying a home soon? Complete our short form and we’ll connect you with the best loan options for your target property and financial situation—fast.

  • 💡 Only 2 minutes to complete
  • 📊 Quick turnaround on pre-approval
  • 🔒 No credit score impact
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Got a Few Questions First?

Let’s talk it through. Book a call and one of our friendly advisors will be in touch to guide you personally.

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Important Disclaimer

This calculator is for illustrative purposes only and does not constitute financial, legal, or investment advice. Results are based on general assumptions and may not reflect actual performance or eligibility. This is not a loan estimate or approval. Please consult with a licensed mortgage advisor before making financial decisions.

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