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FHA 203k Contractor Directory & Certification Program

PURCHASE AND REHAB YOUR HOME WITH AN FHA 203k LOAN

Most home buyers are turned off at the sight or even the thought of a buying a fixer-upper, foreclosure, or an older home today. Educated and informed home buyers, on the other hand, are utilizing the FHA 203k loan to buy and renovate their new homes with little or no additional out-of-pocket expenses. In fact, the FHA 203k loan is a tool used by savvy home buyers and home owners, successful contractors, real estate and mortgage professionals since 1978.

An FHA 203k loan is very similar to the traditional FHA loan. The main difference is that with the FHA 203k loan, the borrower is adding money to their mortgage loan to finance any repair/improvement costs. Whereas the traditional mortgages require the property to meet certain condition requirements before the loan is funded, the FHA 203k loan allows the borrower to purchase/refinance their home and complete the repairs/improvements after the transaction closes. With the FHA 203k loan, a borrower can repair/improve his/her home without worry about the additional out-of-pocket expenses for the repairs/improvements.

The Standard 203k allows for complex rehab such as structural modifications, additions, landscaping, architectural/engineering drawings, and requires the use of a HUD approved FHA 203k Consultant. The renovation cost for the Standard 203k is $5,000 - FHA mortgage limit for the area in which the property is located (up to $1.4Million – some restrictions apply). Click Here to access the maximum FHA mortgage limits for all areas.

The Limited 203k version, on the other hand, is intended for uncomplicated and more simple rehab and will not allow for structural modifications, landscaping, etc. The renovation cost for the Limited 203k are $0 - $35,000 (some restrictions apply).

203k Benefits to Buyers/Borrowers

  • Renovate home with little/no additional out-of-pocket expense
  • Low down payment (3.5%)
  • Combine purchase/refinance + rehab funds into one low-interest, tax-deductible mortgage which is based on the improved appraised value
  • Include mortgage payments into 203k if home is not livable during renovations
  • Submit a strong purchase offer if presented properly to seller
  • Buyers face less competition from other buyers to purchase fixer-uppers, foreclosures or older homes that are outdated
  • Better opportunities for "good deals" on home purchases
  • Ability to purchase properties that may not meet FHA standards and complete the repairs/improvements AFTER the home is purchased.
  • Select from a larger selection of properties for sale (in any condition), including condos, townhouses, mixed-us, multi-family, single-family dwellings and those that do not currently meet FHA standards
  • When offer is presented properly to seller, 203k offers mean the seller does not have to fix-up or repair the property, but allows the buyer to include these items into their 203k mortgage and complete the improvements after closing using the buyer's own style and design.

203k Benefits to Homeowners & Sellers

  • Market property to more buyers
  • Allow buyers the opportunity to renovate, upgrade or improve to suit their tastes and preferences
  • No need to settle for low-ball cash offers
  • Current condition of property not required to meet FHA's property standards
  • Buyer is permitted to correct any property deficiencies after close of escrow
  • No more inspection concerns
  • Absolutely no repairs are required prior to close of escrow
  • Seller not responsible for cost of repairs/improvements
  • Transaction will close with property in "AS-IS condition
  • Closing occurs in 45 days

 

 

 

203k Benefits to Realtors® & Lenders

  • Increase income by selling more homes and originating more loans
  • Raise real estate values by improving homes and neighborhoods
  • Decrease foreclosure inventory
  • Help buyers who previously could not buy homes
  • Help seller/owners with properties in outdated or fix-up condition
  • Spur economic growth by creating job opportunities for the construction/remodeling industry
  • Promote an under-utilized niche program that not many Realtors® or Lenders understand
  • Revitalize your community

 

 

 

 


Through the 203k Contractor Certification Program, contractors receive education on the 203k to help them better understand the complex nature of the FHA 203k Loan, such as HUD/FHA guidelines, paperwork, time lines, compensation structure, lender overlays, processes, eligible and ineligible items of the 203k. This education is required in order to earn the designation as a Certified 203k Contractor®. To verify their 203k Contractor Certification status, contractors will be listed here in the 203k Contractor Directory.

Until 1995, HUD maintained a database of HUD approved builders. Since disbanding that approval status in 1995 (ML 95-97), HUD/FHA no longer certifies, approves or endorses contractors/builders, including those who want to do work under the 203k program. Instead HUD/FHA allows the borrower to hire whomever they want and requires the lender making the loan to determine that the borrower's selected contractor is "acceptable" to do the work by verifying the contractor's references, credentials, work experience, education and understanding of the 203k. Because lenders do not have an education program for contractors on the 203k loan, contractors complete the 203k Contractor Certification Program to receive the 203k education needed and get listed in the 203k Contractor Directory as the method of validating their understanding, experience, and competency in the FHA 203k loan program. The Certified 203k Contractors® listed here on the 203k Contractor Directory have completed the 203k Contractor Certification Program, which means they know the guidelines, paperwork, time lines, compensation structure, lender overlays, necessary steps, recommended processes, eligible and ineligible items, as well as roles of the various participants (lender, 203k consultant, Realtor® and consumer) with the FHA 203k loan.

To learn more about the FHA 203k loan program, please review the information below and on the FAQ page. For more detailed assistance, please proceed to the Contact page.

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