A 203k loan is a rehabilitation loan issued by the Federal Housing Administration (FHA) that includes purchase price and construction budget for a property. 203k loans are issued by participating mortgage lenders to qualifying homebuyers who intend to live in the property once construction is completed. A licensed general contractor is required to ensure the construction is completed on time and on budget. The budget is determined by a 3rd party 203k inspector who issues a Specification Of Repairs ("SOR") which is reconciled with the general contractor's budget.