Posted November 22nd, 2025

Limited vs Standard 203k for 2025 — The Updated Consultant’s Guide

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Limited 203k vs. Standard 203k in 2025 — The Updated Consultant’s Guide Borrowers & Lenders Can Trust

If you’ve been in the renovation loan world for more than five minutes, you already know there are two flavors of the FHA 203k: the Limited and the Standard. And while lenders often try to explain the differences, they sometimes oversimplify it to,
“Small repairs vs. big repairs.”

That’s not wrong… but it leaves out a lot of detail borrowers need in order to make the right decision. 

And with the FHA updates rolled out on November 4, 2024, some of the old assumptions about these programs no longer apply.

This guide lays everything out clearly — the way experienced consultants explain it to clients, lenders, and contractors every day.

🧩 The Big Picture: Limited 203k vs Standard 203k

Let’s start simple and expand from there.

The FHA Limited 203k (formerly the Streamlined (k))

Best for: Cosmetic & minor repair projects under $75,000

This program got a major facelift when FHA increased the rehab cap from $35,000 to $75,000. It was long overdue — $35,000 didn’t go far in today’s construction world. The $75,000 also includes any contingency the lender may impose. If your contractor's bid comes in at $75,000 and the lender requires a 20% contingency this loan just became a Standard 203k. This isn't allowed to go back to a limited 203k.

Limited 203k Core Rules

• Maximum repair budget: $75,000
• No structural work allowed
• No architect required
• No HUD consultant required (but can be used)
• Great for updating kitchens, bathrooms, flooring, roofs, HVAC, paint, windows, doors, etc.
• Funds are disbursed in two draws
• Contractor must be approved by lender. Borrower can act as their own contractor and hire up to five subcontractors.
• Borrower must have a firm contractor bid or up to five subcontractor bids before closing

When the Limited Works Beautifully

• Light fixers
• Rental-ready touch-ups
• Minor exterior improvements
• Fixing obvious defects (roof, HVAC, windows, flooring)
• Borrowers who don’t want a major renovation

When the Limited 203k is NOT a good fit if the following is needed;

• Foundation work
• Load-bearing wall changes
• Room additions
• Structural revisions
• Homes with major safety issues
• Projects requiring architectural drawings

In these cases, you’re headed for the Standard 203k.

The FHA Standard 203k

Best for: Major rehab, structural repairs, additions, and complex projects

The Standard 203k is the heavy-hitter. If a home needs serious work — the kind that requires a licensed general contractor, architectural drawings, or structural changes — this is the correct product.

Standard 203k Core Rules

• Minimum repair budget: $5,000

No maximum rehab limit (other than FHA county loan limits) 

• HUD consultant is required
• An Architect required when structural work is involved
• Unlimited number of draws
• Can include full gut rehabs, additions, foundation repair, reconfigurations, and more
• More lender oversight
• More documentation
• Higher complexity — but far more flexibility

Common Standard 203k Projects

• Full home gut renovation
• Adding a bedroom or bathroom
• Structural repairs
• Room additions
• Garage conversions
• Second-story additions
• Major layout redesign
• ADU additions

If the home needs more than a facelift, the Standard is the tool for the job.

🛠 Key Differences (Explained in Practical, Real-World Terms)

Borrowers understand this best when we talk about what they’re actually allowed to do.

1. Structural Repairs

• Limited: Forbidden
• Standard: Fully allowed

If you touch a beam, header, footing, or foundation, you’re in Standard territory.

2. Repair Complexity

• Limited: Simple improvements
• Standard: Anything complicated

3. Consultant Involvement

• Limited: Optional
• Standard: Required

And after the November 2024 fee updates, the consultant’s role is more valuable than ever.

4. Architectural Plans

• Limited: Never required
• Standard: Required when structural

5. Draw Process

• Limited: Two draws
• Standard: Multiple draws

6. Time to Close

• Limited: Faster
• Standard: More time due to complexity

7. Allowed Improvements

Limited 203k:

• Paint
• Flooring
• Appliances
• HVAC
• Roof
• Windows
• Doors
• Non-structural kitchen/bath remodels

Standard 203k:

• Everything above PLUS:
• Room Additions
• Structural changes
• Foundation repair
• Layout redesign
• Full gut renovation
• Major roofing structures
• Decks, porches, garages
• Conversions (garage to ADU, etc.)

🔎 How Borrowers Choose Between Limited & Standard

Here is how I walk borrowers through the decision:

1. Can the repairs stay under $75,000?

If yes → Limited may work.

2. Is anything structural?

If yes → Standard.

3. Does the house need layout changes?

If yes → Standard.

4. Does the borrower want an addition?

If yes → Standard.

5. Does the borrower want a quick closing?

The Limited is faster.

6. Is the contractor inexperienced with renovation loans?

Using a consultant (even on a Limited) saves them from costly errors.

📣 Lender Talking Points Borrowers Understand Instantly

• “If it’s a big project, the Standard gives you room to work.”
• “If it’s cosmetic and under $75,000, the Limited saves time.”
• “If the inspector or appraiser calls out structural repairs, you must use the Standard.”
• “The consultant protects your investment and ensures HUD compliance.”

💡 Final Guidance for 2025

With the new fee structure and the increased Limited cap, you can expect:

• More borrowers choosing a Limited
• Fewer projects forced into a Standard
• More consultants assisting Limited files
• Better scopes
• Faster approvals
• Stronger contractor oversight

Both programs are powerful tools — as long as the borrower chooses the right one from the start.

Pick up the phone and dial 916-758-1809 and we can discuss your particular scenario.