About the 203k

History of the FHA 203k

The FHA 203k Loan was created in 1978 as a method to manage and dispose of HUD-owned multi-family properties. It has change many times since then, most recently in November 2024.

In 1995, HUD eliminated their approval process for builders/contractor (Mortgagee Letter 95-57). Since then, the 203k Contractor Certification Program has been chartered with the responsibility of educating and preparing contractors to work with the FHA 203k Loan. 

The 203k Contractor Certification Program is the standardized process by which contractors become educated on the 203k and the only process by which contractors become Certified 203k Contractors® , and Certified 203k Contractors® have helped to increase the use of the FHA 203k Loan by almost 700%.

The program exceeds all HUD/FHA requirements, all 203k Lender overlays, and provides two primary services:

  1. The 203k Contractor Education Course where contractors learn the FHA 203k & become Certified 203k Contractors® and
  2. The online directory to locate Certified 203k Contractors® 

The 203k Contractor Certification Program educates contractors on the complex 203k process and allows 203k mortgage lenders, 203k Consultants, Realtors®, and 203k customers/borrowers to locate  Certified 203k Contractors® for their FHA 203k loan. Through the 203k Contractor Certification Program, even the most experienced contractors learn how to work with the FHA 203k loan.

Problems with the FHA 203k

Many contractors may be asked to do work under the FHA 203k Rehabilitation Loan program, but most are not qualified.
Unless the contractor is a Certified 203k Contractor®, these are the problems:

  • contractors may not know the 203k specific paperwork
  • contractors may not know the federal FHA 203k Loan Guidelines
  • contractors may not know about the strict timelines for 203k Loans
  • contractors may not know the required format for 203k bids/estimates
  • contractors may not know the complex draw process for the FHA 203k Loan
  • contractors may not know the rules for the different versions of the FHA 203k Loan
  • contractors may not know how to stay within the guidelines of numerous lender overlays
  • contractors may not have sufficient working capital to pay for startup costs and ongoing project expenses (no upfront deposits available) 

As a result, many of the contractors who attempt a 203k project actually walk off the job out of frustration and leave the customer and lender in a challenging situation that can be difficult to correct.

The FHA 203k Loan is not a typical remodeling/renovation process because of the contractor compensation structure, unique rules, time lines, procedures, paperwork, and specific government guidelines, which means that very few contractors are qualified to be a 203k Contractor. The success of the 203k depends on working with a contractor who has validated 203k education/experience, such as a Certified 203k Contractor®.

Solutions for the FHA 203k

Contractors need to be properly educated on the FHA 203k guidelines, timelines, paperwork, compensation structure, forms, and processes.

After completing the 203k Contractor Certification Program, the contractor has earned the accreditation as a Certified 203k Contractor® and is listed in the 203k Contractor Directory

The 203k Contractor Certification Program consists of:

  1. A comprehensive 203k education course …
    1. 140-page 203k Contractor Manual,
    2. 3.5-hour Education Session,
    3. passing a 100-Question 203k test on the FHA 203k guidelines 
  2. A vetting process to verify customer and business references, license, insurance and the contractor’s financial stability and ability to afford the start-up costs and ongoing expenses of a 203k project.

These Certified 203k Contractors®, which are only found in the 203k Contractor Directory, should display the Certified 203k Contractor® logo on their website, email, and marketing materials. Upon request, their Certificate of Accreditation can be provided by the contractor or the 203k Help Desk.

For more information on FHA 203k loan, visit the FAQ page.

Contractors who would like to learn more about or become Certified 203k Contractors® should proceed to the Certification page.

Certified 203k Contractor Logo