FHA 203K – The Self Help Dilemma

Do you have kids? Know what it feels like when they ask the same question over and over?

I don’t have kids, but I do know what it is like to get the same question OVER and OVER.

Can I do my own 203K renovation? 203K guidelines on the FHA website say I can, why won’t 203k lenders let me.

I’m trained, I know how to paint, I was a carpenter in college, I’ve been doing this for years. I’ve heard all the reasons as to why homeowners should be able to complete their own renovations. I sympathize, I really do. I want you to be responsible for renovating your own house.

However, today I want you to realize why 203K Self Help presents a problem, why underwriters don’t want you to try and why many FHA 203k lenders don’t allow it.

Why 203K Self Help Is an Issue

There are a couple of valid and pertinent reasons why underwriting has a problem with you doing your own renovations and why FHA 203K self help is against the rules at many lenders.

First reason is the checks go to the contractor and they don’t want them in your hands. Putting thousands of dollars into the hands of homeowners for repairs yet to be completed is a recipe for disaster.

While you may be honest, some people are not. The viability of the program depends on qualified contractors doing the repairs as FHA specified. That is why contractors go through a serious vetting process and don’t get the second half of their money until the renovations have been signed off on by the homeowner and the appraiser.

The second reason is for the contractors out there. FHA wants you working and earning money so you can pay for your new FHA 203K mortgage. If you are busy renovating your own house are you working and earning money? No, you’re not. But Jonathan, I’ll do it in the evening after work and on the weekends. Again no, they want the renovations done and done fast.

They don’t want you working nights and evenings to complete your renovations that could have been completed in less than a month by a full time crew.

FHA wants your 203K loan done and you living in that home inside of 30 days. Why? Because they don’t want you paying two housing payments. They don’t want your house back.

Homeowners, we love you, we really do. We understand you’re handy, we understand your creative, but we want you to understand we’re lending you hundreds of thousands of dollars on a loan based on your home repairs being done quickly and with quality. I know you’d like to do the work yourself, but you can’t and we hope you understand.

Have more 203K loan questions? Check out our other resources.

Have questions about how to choose a contractor?

Choosing a 203K Renovation Contractor

Have questions about 203K rates and closing costs?

203K Loans – Interest Rates and Closing Costs

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