203K Consulting

FHA 203K Consulting


If you are thinking about a Fixer Upper you should know all your options.

Did you know a FHA 203K loan allows you to borrow money, using only one loan, for both home improvement and a home purchase/refinance. 203K loans are guaranteed by the FHA, which means lenders take less risk when offering this loan. As a result, it’s easier to get approved especially with a lower interest rate, but you are required by law to hire a consultant – and that is where we come in!


Below you will find information about 203K loans . There is so much more to share so please feel free to reach out if you would like to know more about 203K loans, or get your personalized questions answered by an expert. Please give us a call or drop us a note using the button below.

Why do I need a 203K Consultant for my home’s purchase/refinance and renovation?

When you buy a property that needs structural repairs and/or needs repairs in excess of $35,000, you are talking about projects that may require professional experience and expertise in construction, architecture, building codes and more.

In the past, those who had purchased a fixer-upper would have to apply for two loans in order to finance the repairs: a mortgage and a separate home equity loan or use their savings account for renovations. Now, the two loans are combined, resulting in an easy and convenient loan known as the Limited 203(k) Loan or the Standard 203(k) Consultant Loan. The loans can be either adjustable- or fixed-rate mortgages.

If you decide to buy a home and it needs some updates, repairs or renovations, a 203(k) consultant would inspect the property and talk with you about both the repairs that will be required to meet HUD’s Minimum Property Standards and the optional renovations you would like to make beyond the required items.

How does the 203(K) program work?

With Limited 203(k) and Consultant K Loans, you can begin your home renovations as soon as the loan closes.

The consultant then prepares paperwork that the lender uses to determine the loan amount and underwrite the loan. This paperwork typically includes the feasibility report, architectural plans, and a work write-up that reflects specifications on all of the repairs that will be done, including:

  • cost of materials and cost of labor for each repair,
  • a recommended “contingency funds” amount to be set aside in case there are cost overruns,
  • a recommended inspection schedule, showing the times during construction when the Consultant will inspect the work performed and completed

If the lender needs additional paperwork – for example, a termite inspection report or certification that a roof is structurally sound – the consultant and lender work together to coordinate ordering these reports and making any needed changes or adjustments to various documents, if additional repairs are needed.

A 203K consultant also performs valuable services after the loan closes and repairs begin. When your 203(k) loan closes, a Repair Escrow Account is set up. The consultant inspects repairs as they are completed and, provided the work is satisfactory, tells the lender that funds can be released from the Escrow Account to pay the contractor. On major projects, this inspection and drawing of funds from escrow to pay for completed work will typically happen as often as five times, before the final inspection and final payment.

  • Repairs must start within 30 days of closing and be completed within six months
  • With Limited K Loans, contractors can receive 50% of the total amount when renovations begin, with the remaining amount due as soon as the final inspection is complete
  • With Consultant K Loans, the Consultant inspects the repairs as they’re completed and requests the lender to release the funds
  • In both cases, any remaining funds are applied to the principal balance of the loan