The 203k Contractor Certification Program provides two services - an online directory to locate Certified 203k Contractors® and the Education Course by which contractors earn the accreditation as a Certified 203k Contractor®. The Program enables 203k mortgage lenders, 203k Consultants, REALTORS® and 203k customers to locate the Certified 203k Contractors for their FHA 203k loan needs and educate contractors on the complex 203k process. Through the 203k Contractor Certification Program, even the most experienced contractors receive their education/validation on the FHA 203k loan, the process through which they become a Certified 203k Contractor®.
While almost any contractor may be willing to do work under the FHA Section 203k Renovation Loan program, not all contractors cannot do so for the following reasons:
- Sufficient financial stability necessary to pay for startup costs and ongoing project expenses
- Insufficient understanding of the FHA 203k Loan Guidelines
- Lack of knowledge of the FHA specific paperwork
- Not being aware of the specific timelines for the 203k
- Unaware of the multiple versions of the FHA 203k Loan
- Do not know how to uncover hidden lender-specific rules
As a result, many of these 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®.
The contractors listed in the 203k Contractor Directory are Certified 203k Contractors®, having completed an extensive education-based program on the FHA 203k loan, consisting of:
- A comprehensive 203k education course ...
- 172-page 203k Contractor Manual,
- 3-hour Education Session,
- 2.5 hour HUD Webinar, and
- passing a 70-Question 203k test, demonstrating comprehension of FHA 203k guidelines
- 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® are validated by being listed in the 203k Contractor Directory and 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.
While HUD/FHA approves FHA lenders, appraisers and 203k Consultants, HUD/FHA does not approve, certify, or endorse remodeling or general contractors or builders and has not done so since 1995 (Mortgagee Letter 95-57). The 203k Contractor Certification Program serves this need by educating contractors on the FHA 203k Loan program and providing the method of validation of a contractor's understanding, competency and experience with the FHA 203k loan. The Certified 203k Contractors listed in the 203k Contractor Directory are vital to the success of the FHA 203k loan.
History
Until 1996, HUD maintained a database of HUD approved builders/contractors. However, in 1995, HUD started the process of dismantling their approval process for builders and contractor, and in 1996, the dismantling was completed when HUD deleted the database of HUD approved builders and contractors (Mortgagee Letter 95-57).
Ten years later in 2006, the FHA Section 203(k) Rehabilitation Loan started to become necessary and more popular, because of the high number of properties in distressed conditions and the limited availability of mortgage loan options to buy these distressed properties. This need led the Mortgage and Real Estate industries to develop the 203k Contractor Certification Program ... because FHA 203k Lenders, Real Estate Agents, 203k borrowers, and 203k Consultants needed to work with contractors who knew and understood the complex 203k process.
The Metro Phoenix, Arizona area was selected as the beta testing location because of the high number of distressed properties in this area. In 2007, the 203k Contractor Program passed the beta phase and expanded nationwide in order to more efficiently serve the needs of the entire country.
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®. Since the creation of the 203k Contractor Program, Lenders, REALTORS®, borrowers, and 203k Consultants have partnered with Certified 203k Contractors to help increase the use of the FHA 203k Loan almost 700%.
The 203k Contractor Certification Program has been reviewed by HUD and is recognized and used by FHA 203k Mortgage Lenders, HUD Approved FHA 203k Consultants, REALTORS®, and 203k borrowers.
For more information on FHA 203k loan program or the 203k Contractor Certification Program, please proceed to the Contact page and/or visit the FAQ page.
Click here to Recommend a contractor to be Certified for the FHA 203k Loan (click for pop-up form).
Contractors who would like to become Certified 203k Contractors® and listed in the 203k Contractor Directory, should proceed to the Certification page.
