How to Become an FHA 203 K Contractor

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One payment can cover both the mortgage and the rehab.
One payment can cover both the mortgage and the rehab. (Image: NA/AbleStock.com/Getty Images)

The U.S. Department of Housing and Urban Development (HUD) insures home loans through the Federal Housing Administration. FHA has several loan programs, one of which is the 203(k) Rehabilitation Mortgage Insurance Program. With a 203k loan, a home buyer can buy a home that requires significant repairs to be considered habitable. The loan covers the purchase and the cost to rehab the home, rolled into one payment. HUD keeps a roster of approved contractors, known as FHA 203k consultants. The only way to get on the roster is by following procedures outlined by HUD.

Provide proof of at least three years' experience as a general or remodeling contractor and your state contractor's license. The proof should be in a list or resume format.

Read HUD Handbook 4240.4, REV 2 and provide certification that you understand FHA's 203k requirements. The entire handbook is downloadable at HUD's website. Certify in a note that you understand the requirements. This will be included with your proof of experience and contractor's license.

Outline, again in list or resume fashion, your ability to provide cost estimations, prepare plans and complete inspections, per FHA's rules.

Deliver the above documents to the nearest FHA Homeownership Center (HOC). These are listed on HUD's website.

Tips & Warnings

  • HUD sends a participation letter informing you that you meet its requirements. This letter bears your consultant ID number.

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