So my most recent FHA 203K client closes on her home tomorrow. It is a HUD home she bought and financed using a 203K loan. The money she is setting aside will be used to fix the plumbing, heating, a small bit of mold abatement, and flooring. So figure she bought the house for $65,000 and was able to finance the $15,000 worth of work into her loan. She will have a loan for $80,000, but the appraised value of her home "after completion" of the work, is $90,000!! Any money she that is left over after her work is complete will go as a principal reduction to her loan balance. Given she locked in when rates were low, she got a great deal!