General - The Section 203(k) program is the Department’s primary program for the rehabilitation and repair of single family properties. The program allows the borrower to get just one mortgage loan, at a long-term fixed or adjustable rate, to finance or refinance both the acquisition and the rehabilitation. See HUD Handbook 4240.4 Rev-2 and 4150.2 Appendix B-1. (Cooperatives are not eligible for 203(k).)
The appraiser is not to include VC Conditions on the appraisal report for a 203(k). However, if the appraiser identifies repair conditions that were not noted in the work write-up, the appraiser should notify the lender.
An appraiser may not perform a dual role on the same 203(k) property. To prevent
apparent conflict of interest an appraiser may not be a 203(k)consultant , or have a direct or indirect involvement on any property he/she appraise.
The appraisal will contain a statement on the report by the final value that the appraisal
being performed is a 203(k) as improved per plans & specifications. A copy of the plans, specifications, work write-up and other conditions upon which the value was based must be part of the appraisal package.
In mixed use properties, commercial space is to be appraised as if it were residential. The lot value assigned should be for the residential use, not the commercial use.
List of Approved 203(k) Consultants and additional related information for each HOC can be accessed by clicking here or visiting
Additional information on matters relating to consultants may be obtained from HUD Mortgagee Letters and . Please note that HUD Mortgagee Letters and Handbooks may be researched on the Internet at
223(e) - DECLINING URBAN AREAS
PURPOSE AND GENERAL INFORMATION - Miscellaneous Type Home Mortgage Insurance Section 223(a), (e), and (d), ()
The purpose of Section 223(e) is to permit the use of FHA mortgage insurance in older, declining urban areas where there is a need for affordable housing. For additional information on appraising and underwriting a 223(e) mortgage, see the references above.
ADP CODE for a 223(e) is 792.
Copy Printed: REVISION I
02/16/0212 Revision Effective: 05-30-00