You found your dream home and you want to get the repairs or remodeling done, but you know that you can do it yourself for less money than a contractor would cost and want to save the money on your 203K loan if you can. Most lenders frown upon this activity, but some will allow it with certain stipulations. In order for you to qualify with the lender, there are certain requirements that you must meet.
The HUD Requirements
HUD will not let just anyone do the rehab work on a 203K loan project. You have to have certain qualifications. In order to prove these qualifications, you will have to go through HUD. They will require you to provide a letter in writing stating your qualifications along with the necessary proof. The proof they look for includes:
- You have the necessary license for the type of work you will be performing. For example, if you are redoing the plumbing in a home, you need to have a plumber’s license. If you’re looking for a licensed plumber narellan you can always seek help from Walker Assured Plumbing. If you are doing the electricity, you need an electrician’s license.
- You have to prove that you have the time necessary to complete the rehab in a timely manner. In general, all 203K work needs to be completed in 6 months. If your job takes up a majority of your time and you have a large family, most lenders will assume you do not have the time to complete the work and will deny your request to do the work yourself.
- You must have any tools that are needed to complete the job. If you do not have a certain tool or tools, you will have to purchase them with your own money; the lender will not allow for disbursement of funds for tools.
FHA Lender Overlays
The above guidelines are strictly the guidelines set forth by HUD. Each lender can have their own requirements on top of these. Every lender will differ, which means you can shop around with various lenders should you not get the results you desire. A few of the most common lender overlays include:
- You may be required to have a certain amount of assets in the bank in order to cover any extra expenses or the need to bring in a professional should you be unable to complete the job as planned.
- Proof of the number of hours you work per week or your other obligations in order to determine the amount of time available for the project.
- Proof of your ability to do the job that goes beyond a standard license. The lender may want to see proof or hear of your past experiences to know what you are and are not capable of completing.
Remember, any lender can deny your request to do the repairs on your own. It is up to each lender whether or not they are comfortable with you doing them. The reason that the lenders are so leery is because the value of the home they are providing a mortgage on is dependent on the work that you complete. If you do not do the work appropriately, the value will not be nearly as high as was anticipated, which means the entire mortgage is thrown off. The lender’s money is at stake, which is why they are very choosy on who they allow to do the work. More often than not, self-work is not approved and the chosen route is to have professionals do the work to ensure that it is done correctly and in a timely manner.