Eyeing a fixer-upper in Plymouth County and wondering whether an FHA 203(k) or a conventional renovation loan will get you to the finish line? You are not alone. The right choice can lower your upfront cash, streamline draws, and keep your project moving through local permits and inspections. In this guide, you will learn how each loan works, what it costs, and how to navigate local factors like Title V, historic review, and flood zones. Let’s dive in.
FHA 203(k) basics
FHA 203(k) combines your purchase and renovation funds into one mortgage that you use for an owner-occupied primary residence. You can choose a Limited 203(k) for smaller, non-structural projects, or a Standard 203(k) for major work that can include structural changes.
It is designed for buyers who need a lower down payment and want one loan for both acquisition and repairs. FHA mortgage limits and property standards apply, and the home must be your primary residence.
Conventional renovation basics
Conventional renovation loans, such as Fannie Mae HomeStyle Renovation and Freddie Mac CHOICERenovation, also roll purchase and rehab costs into one mortgage. These products often allow a broader range of improvements, including many luxury items, and can be used for primary residences, second homes, or investment properties depending on the product.
They typically work best if you have stronger credit, a higher down payment, or you want the option to remove mortgage insurance in the future.
Down payment and credit
- FHA 203(k): Typical minimum down payment is about 3.5% for eligible borrowers with qualifying credit. You must occupy the home as your primary residence, and the total loan must fit within FHA county limits.
- Conventional renovation: Minimum down payments vary by product and your credit profile, sometimes as low as 3% for eligible buyers, but many lenders ask for 5% to 20% depending on risk and scope. Credit standards are generally stricter than FHA, and stronger credit often earns better pricing.
Mortgage insurance costs
- FHA 203(k): You pay an upfront mortgage insurance premium that is commonly financed into the loan, plus annual mortgage insurance paid monthly. The duration depends on current HUD rules. FHA insurance can remain for many years unless you refinance or meet specific exceptions.
- Conventional renovation: You may need private mortgage insurance if your down payment is below lender thresholds. PMI usually can be cancelled when you reach required equity levels, which can reduce long-term cost compared with FHA.
Loan size and value limits
- FHA 203(k): The loan cannot exceed the FHA county loan limit for the property type. The calculation considers the purchase price plus renovations and the as-completed appraised value, subject to FHA caps.
- Conventional renovation: Conforming loan limits apply for Fannie Mae and Freddie Mac products. Larger projects may require a jumbo or portfolio renovation option if you exceed conforming limits.
Scope of work rules
- FHA 203(k) Limited: For cosmetic and non-structural items, with a program cap. Common examples include roof repairs, HVAC, and minor remodeling. Structural work is not allowed under the Limited option.
- FHA 203(k) Standard: Allows structural changes, additions, foundation work, or major systems replacement. Requires plans and a HUD-approved 203(k) consultant.
- Conventional renovation: Often more permissive and can allow structural and many luxury items, subject to product and lender rules.
Appraisal and draws
- FHA 203(k): Appraisal reflects as-completed value. Standard 203(k) requires a HUD consultant who prepares the work write-up, oversees inspections, and approves draws. Expect a contingency reserve, often 10% to 20%, for surprises.
- Conventional renovation: Appraisal reflects as-completed value based on contractor bids. Draws are typically administered by the lender or a third party, often with fewer mandatory inspections than a Standard 203(k).
Timelines to expect
- FHA 203(k) Limited: Faster than Standard but still longer than a typical purchase mortgage due to added documentation.
- FHA 203(k) Standard: More time for plans, HUD consultant review, and permitting. Post-closing draws and inspections extend the project timeline.
- Conventional renovation: Can be faster with an experienced lender and appraiser. Fewer mandatory third-party inspections can help streamline closing and draws.
Property types and occupancy
- FHA 203(k): For 1 to 4 unit owner-occupied properties. Condo eligibility is more restrictive and may require project approval. Manufactured homes and certain conditions may have special rules.
- Conventional renovation: Often available for primary residences, second homes, and investment properties, depending on the product and lender overlays. Condo rules must meet investor or lender standards.
Local Plymouth County factors
Plymouth County covers diverse towns such as Plymouth, Brockton, Duxbury, Kingston, and Scituate. Local rules, permit timing, and inspections vary by town, so plan around the jurisdiction where you are buying.
- Permitting and plan review: Check with the building department early for electrical, plumbing, HVAC, structural, roofing, and septic permits. Some towns may require historic or conservation review, especially near coastal areas, which can add time.
- Septic and Title V: Many homes are not on municipal sewer. Massachusetts Title V rules govern septic. If the system fails inspection at sale or needs replacement, you may need to address it in the rehab budget and timeline for lender approval.
- Flood zones and coastal rules: Coastal properties may sit in FEMA flood zones. Flood insurance can significantly affect monthly cost, and coastal resiliency rules can impact design and permitting.
- Older housing stock: Much of the area predates 1978. Plan for lead paint, possible asbestos, older wiring, and other issues that require specialized remediation and documentation. Renovations that disturb painted surfaces in pre-1978 homes must follow EPA Renovation, Repair and Painting rules.
Contractor bid checklist
Before you request bids, draft a clear scope of work with must-have and nice-to-have items, then confirm with your lender what your chosen product will finance.
Require each bid to include:
- Line-item details for demolition, labor by trade, and materials.
- Separate line items for HVAC, electrical, plumbing, roofing, windows, insulation, and any structural work.
- Specific materials or allowances, a timeline with milestones, and a completion date.
- A payment schedule tied to completed milestones that fits the lender’s draw process.
- A contingency of 10% to 20%, noting whether it is in the bid or added to the loan.
- Permit responsibilities and costs, insurance and licensing, and EPA RRP certification for pre-1978 work.
- Lien waivers at each draw and a defined change-order process.
Best practices when selecting a contractor:
- Get at least three comparable bids using the same scope and materials.
- Verify references, recent work, and experience with rehab-loan draws and inspections.
- Confirm who the subcontractors are and that they are licensed and insured.
Which loan should you choose?
Consider FHA 203(k) if you want a lower down payment, will live in the home as your primary residence, the all-in loan amount fits FHA county limits, and you are comfortable with the HUD consultant process and a longer timeline.
Conventional renovation may fit better if you have stronger credit and more cash, want broader improvement options, prefer the ability to cancel mortgage insurance later, are buying a second home or investment property, or your price point exceeds FHA limits.
Next steps in Plymouth County
- Compare lenders that regularly originate both FHA 203(k) and conventional renovation loans. Ask for side-by-side cost estimates that include upfront and monthly mortgage insurance and projected timelines.
- Build a prioritized scope and obtain three detailed contractor bids formatted for appraisal and draws.
- Contact the target town’s building department to confirm permit requirements, historic or conservation reviews, and expected timelines.
- Check flood zone status and estimate flood insurance if the property is near the coast or waterways.
- For pre-1978 homes, verify contractors are EPA RRP certified and include lead-safe practices in the budget and schedule.
Ready to evaluate a specific property or run the numbers on both loan types? You can get practical, operator-level guidance on scope, budget, and lender expectations with a local advisor who has been through it. If you want a straightforward plan from offer to final draw, connect with Zach Midwood to get started.
FAQs
What is an FHA 203(k) loan for Plymouth County buyers?
- It is an FHA-insured mortgage that finances both purchase and renovations for an owner-occupied home, with Limited for non-structural work and Standard for larger or structural projects.
How do conventional renovation loans differ in this market?
- HomeStyle and CHOICERenovation finance purchase and rehab in one loan, often allow more types of improvements, and can be used for primary, second homes, or investment properties depending on product rules.
Which has the lower monthly cost over time?
- It depends on your credit, down payment, and insurance. FHA has upfront and ongoing mortgage insurance, while conventional PMI can often be cancelled at set equity thresholds.
Can I include septic, permits, or hazard remediation in the loan?
- Many renovation loans allow essential repairs and permit fees, including septic work and lead or asbestos remediation when done to required standards and documented.
Who manages inspections and draws during renovations?
- Standard 203(k) uses a HUD consultant for work write-ups and draw approvals. Limited 203(k) and conventional products use lender or third-party inspections and draw administration based on lender rules.
