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Fusion Condition and Environmental Inspection Services - 203(k)
Condition and Environmental Inspection
Serving the Chicago Metropolitan Area

Licensed, Certified and Insured

(703) 286-9545 

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HUD 203(k)


The FHA 203(k) allows a borrower to include the repair/improvement costs in the loan amount on either a purchase or refinance with one closing. The funds for repair/improvement are held in escrow, to be released when the work is completed. The mortgage amount is based on the projected value of the completed project. Encouragement from FHA makes this loan easier AND faster to close than ever before. 

The 203(k) Advantage 

  • Finance up to 6 months mortgage payments (PITI) 
  • Special HUD down payment programs 
  • Eligible for Energy Efficient Mortgage 
  • An FHA assumable mortgage 
  • One-to-Four Family Dwellings 
  • Standard FHA Downpayment Programs Apply 
  • Purchase or Refinance 
  • Assumable FHA Insured Loan 
  • All rehabilitation work is completed after loan closing 


No minimum requirement for improvements is required. Improvements may also include a detached garage, a new detached garage, or the addition of an attached unit (if allowed by local zoning ordinances). 
The mortgage must include one or more of the items listed below: 
  • Structural repairs and alterations. 
  • Includes such items as additions to the structure, repairing any and all structural damage. 
  • Improvements in the functionality or modernization. 
  • Includes such items as remodeled kitchens and bathrooms. 
  • Changes for aesthetic appeal, and the elimination of obsolescence. 
  • New exterior siding and new doors. 
  • Repair or replacement of plumbing, heating, air conditioning or electrical system. 
  • Installation of new plumbing fixtures are acceptable, including interior whirlpool bathtubs. 
  • Installation of Well and/or Septic System 
  • Must be installed or repaired prior to beginning any other repairs to the property. Properties less than one acre in size can be limited on this item. 
  • Replacement of flooring, carpeting or tiling 
  • Energy conservation improvement 
  • New double pane windows and doors, storm windows, insulation, solar domestic hot water systems. 
  • Major landscape work and site improvement 
  • Patios and terraces that improve the value of the property equal to the cost, or that are needed to preserve the property from erosion. Tree removal is also acceptable it the tree presents a hazard to the occupants. 
  • Improvements for easier accessibility to the handicapped 

  • New cooking ranges, refrigerators and other stand alone appliances, 
  • Painting and other cosmetic repairs. 
  • Fencing, new walks and driveways, and general landscape work (trees., shrubs or seeding). 
  • Repair of a swimming pool, up to $1,500 

Items that will not become a permanent part of the property are not eligible. 
Luxury items are not eligible. These include, but are not limited to: New swimming pools, exterior hot tubs, saunas, spas, tennis courts, and barbecue pits. 

How Do I Get Started? 

1. Select Property 
  • List of "Personal" Upgrades from the Buyer 
  • Rough Estimate of Cost 
  • Estimate of After-improved Value 
2. Sales Contract 
3. Loan Application 
4. Termite Report (The termite report must be given to the FHA Consultant at time of     Property Inspection) 
5. Inspection of Property (Done by an FHA Consultant) 
  • Work Write Up (Specification of Repair) The Consultant will combine the 
  • Cost Estimates 
  • Plan Review Required Improvements 
  • Personal Upgrades 
  • Work Write Up (Specification of Repair) 
  • The Work Write Up MUST be signed by you, the customer, to signify full acceptance of the Specs 
6. Selection of a Class "A" Contractor -- Must be approved by Lender (Required on rehab   over $10,000) 
7. FHA Appraisal (Performed by an FHA Appraiser) 
8. Process/Underwrite the Loan 
9. Close the Loan 
10. Rehabilitation of Property 


On 203k loans, the Termite Inspection is performed at the BEGINNING of the loan so that all Termite Damage can be included in the Work Write Up ("Specs"). Termite Inspections are good for 90 days on 203k loans. 

The "Specs" are done by the HUD Approved Consultant. 
An FHA Consultant will inspect the property to compile the Work Write Up ("Specs") and a Contractor will need to bid on the job using the Specs from the Consultant. The Consultant, Borrower, and Contractor all need to agree on the "Scope of Work" (Specs) and the pricing to complete the job before the loan can close. 

The APPRAISAL cannot be ordered until the Specs have been signed by all three parties (Consultant, Borrower and Contractor). 

Although not required we also suggest that mold and Radon test be performed in the property prior to the "Specs" so that any needed remediation or mitigation can be included in the the Work Write Up.

Test for other hazards such as flood, and environmental contamination should also be investigated prior to closing on your loan.

Fusion Services is a 
HUD approved 203(k) Consultant and Inspector

Contact us today to schedule your consultation