Dear Home Buyer,
If you are financing the home with 203K financing there is no need for a $13,000 deposit. Is the contractor requiring this money? The 203K program is great but not every contractor is willing to work with the payment schedule.
You may trust your contractor but I would never give $13,000 upfront to anyone. If it is needed for materials then I suggest you meet with the material supplier and pay the bill directly. The invoice should specifically reference delivery to the property address and you will have control over the use of the funds. The materials should not be custom ordered items and should not be delivered until you actually own the property. You are correct, if the bank backs out, you are out the money without any recourse. There are too many great deals available to put yourself at that kind of risk.