An FHA 203k loan allows you to borrow money, using only one loan, for both home improvement and a home purchase. … 203k loans are guaranteed by the FHA, which means lenders take less risk when offering this loan. As a result, it’s easier to get approved
The difference between both loans is that a FHA 203k rehab program only requires a 3.5 percent down payment. Conventional rehab loans can technically be done with as little as 5 percent down. But realistically you should expect to need a 20 percent down payment for conventional rehab financing