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About

History

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®. Certified 203k Contractors have helped to increase the use of the FHA 203k Loan by almost 700%.

The 203k Contractor Certification Program is routinely reviewed by HUD and exceeds all 203k Lender overlays. 

The 203k Contractor Certification Program provides two services:

  1. the Education Course by which contractors learn how to work with the FHA 203k and
  2. an online directory to locate Certified 203k Contractors®. 

The 203k Contractor Certification Program allows 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 learn how to work with the FHA 203k loan.

Problems

Many contractors may be willing to do work under the FHA 203k Rehabilitation Loan program, very few can not for the following reasons:

  • do not have sufficient working capital to pay for 203k startup costs and ongoing 203k project expenses
  • do not know the FHA 203k Loan Guidelines
  • do not know the 203k specific paperwork
  • do not know the specific timelines for the 203k
  • do not know the required format for 203k estimates
  • do not know the payment process for the FHA 203k Loan
  • do not know there are multiple versions of the FHA 203k Loan
  • do not know how to stay within the guidelines of lender overlays

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®.

Solution

Certified 203k Contractors® are listed in the 203k Contractor Directory after completing the extensive education-based program on the FHA 203k loan, consisting 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® 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.

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.

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