For a FHA 203K loan, can the buyer make the repairs themselves?

Asked by Tiffanie Burney, Springboro, OH Sun Sep 19, 2010

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Paul Welden, Other Pro, Tempe, AZ
Sat Sep 25, 2010
HI Tiffanie,

HUD's guidelines do allow the buyer to make the repairs themselves on an FHA 203(k) loan. Here is the verbiage directly from HUD's site located here :

"Is a contractor required to do the work? No. However, if the borrower wants to do any work or be the general contractor, they must be qualified to do the work, and do it in a timely and workmanlike manner. It is very important that the work be done in a time frame that will assure the completion of the work that will be agreed upon in the Rehabilitation Loan Agreement (signed at closing). A borrower doing their own work can only be paid for the cost of the materials. Monies saved can be allocated to cost overruns or additional improvements."

So, the 203(k) program does allow the buyer (homeowner at this point) to do the work themselves, but HUD allows the lender making the loan to have overlays that can be more restrictive. So, while HUD does allow the buyer (homeowner at this point) to do the repairs themselves, most lenders will not allow this. So, this decision is made by the lender. Check with the lender to find out about their overlays (add'l restrictions).

Contractor Directory for the FHA 203(k) Program
(480) 463-4663
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Corey Grushin, Agent, East Brunswick, NJ
Mon Sep 20, 2010
Tiffanie it would be required that the borrower have a licensed and insured contractor be procured for the work necessary to meet FHA guidelines. That contractor is responsible for the completion of the work and will have the payments made out to them (from the escrow account). But if the contractor is willing to use you for the work (because you are trained and skilled enough to complete) then you can do the work. Remember the contractor will be required to pull permits to do the rehabilitation where necessary. Also the work completed should not only be inspected by the governing township (where applicable) but also by the 203k consultant or the appraiser if permissible.

I've attached the link for the 203k program from Good luck Tiffanie and have a great day!
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Rudy McDowell, Mortgage Broker Or Lender, Bloomfield Hills, MI
Mon Sep 20, 2010
Hi, Tiffanie

If 203K funds are going to be used, regardless of the size or type of repair or renovation, guidelines require that a FHA and Lender approved licensed and/or bonded contractor/repairman must do the work.
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Alice Adams, Agent, Knoxville, TN
Sun Sep 19, 2010
I believe that the owner can make some of the smaller repairs but not repairs involving major systems - HVAC, electric, roof etc. Im not sure where to find a definitive guide.
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