Contractors and Builders Resource Center

Homeowners have far less equity in their homes today than in years past. Combined with tighter lending standards financing a home improvement project is tougher than ever. The solution is the FHA 203k loan, which allows a homeowner to refinance their existing mortgage loan(s) and a home renovation project up to 97.75% of the "after-completed" value of the house. The "after-completed" value of the house is the appraised value that includes the proposed renovation project. This compares to a homeowner being able to obtain a home equity loan from a bank of only up to 80% of the combined loan amounts based on the current or "as-is" value of the home.

This program is not for all Contractors. Since FHA 203k Loan is a government backed program the Contractor must be approved by the lender and will have to:

Since the lender is approving you as the Contractor as part of the loan approval the homeowner can't select a different Contractor without prior approval from the lender. This protects you and ensures that you are paid for all work completed on the project directly from the lender based on a pre-determined draw schedule. And since this is a Federally Government Insured Loan Program there is virtually no chance of payment default provided you are in compliance with FHA Guidelines.

Every time you bid on a project of $5,000 or more mention that you have access to a lender that can finance up to 97.75% of the "after completed" value of the house. In today's ultra-conservative lending environment homeowners who are equity and/or credit score challenged need guidance on how to obtain affordable home financing to complete a renovation loan project. And since most other Contractors won't mention the FHA 203k Loan financing you will create a unique selling point versus your competition.