Buying · Financing

Financing the repairs inside the purchase

A property that needs work is cheaper, and the reason it is cheaper is that most buyers cannot pay for the purchase and the repairs at the same time. The 203(k) exists to solve that, on one to four units, at FHA down payments. It is the most underused tool available to a first buyer on the South Shore.

Limited and standard

	Limited 203(k)	Standard 203(k)
Scope	Non-structural work only	Structural repairs, room additions and accessory dwelling units
Suits	Kitchens, baths, roofing, systems, cosmetic work	Anything that moves a wall or adds a unit
Cap on the rehab portion	Reported at $75,000 in current guidance, though $35,000 appears in older sources. Confirm the figure with your lender before you plan around it	No fixed rehab cap. Bounded by the FHA loan limit for the county and unit count

Both versions cover one to four unit properties, which is what this audience is buying. The same loan that buys a tired Brockton three-decker can pay to make it rentable.

The standard version covers an ADU

The standard 203(k) covers room additions and accessory dwelling units. Set that beside the Massachusetts ADU law, which since 2 February 2025 has allowed an ADU by right in single-family zoning statewide, and a single-family with room on the lot starts to look like a two-unit purchase financed at 3.5% down.

That combination is not automatic. Lenders apply their own overlays on top of FHA rules, and ADU work under a renovation loan is handled inconsistently between them. Establish that a specific lender will do it before you write an offer that depends on it. Our town ADU pages cover what each municipality permits.

Questions people ask

Can I use an FHA 203(k) on a two, three or four family?

Yes. Both the limited and standard 203(k) cover one to four unit properties, provided you occupy one of the units as your primary residence.

What is the difference between a limited and a standard 203(k)?

The limited version covers non-structural work only. The standard version covers structural repairs, room additions and accessory dwelling units, and has no fixed cap on the rehab portion beyond the county FHA loan limit.

Can a 203(k) pay for an ADU?

The standard 203(k) covers accessory dwelling units. Lenders apply their own overlays and handle ADU work under renovation loans inconsistently, so confirm with a specific lender before making an offer that depends on it.

Does a 203(k) affect the FHA self-sufficiency test?

On three and four unit properties it makes it harder. The test requires 75% of total market rent to cover PITI, and a larger rehab loan raises PITI. Two-family properties are exempt from the test.