The Renovation Mortgage Process Revealed


Proper upfront identification of possible defects, violations, or minimum Property Standard related items requiring repair for loan approval will:Save All Parties Time and Money

Depending on your Renovation Project & the Loan Program being utilized an experienced 203k/HUD Consultant can really help streamline the process with early involvement in the process. Here is more information to help you understand the role of the 203k/HUD Consultant.

  • The HUD Consultant requirement was created to assist with the relationship between the borrower and contractor on a FHA 203K Renovation projects. Consultants are effectively project managers
  • The HUD Consultant must be approved by HUD
  • The HUD Consultant is an independent contractor that works for/on behalf of the homeowner who hires them.
  • The addition of the Consultant resulted in more effective and efficient renovation loan projects and helps maintain consistency on those projects.

  • The HUD Consultant stays with the project on a Standard FHA 203k Program until the project is complete and reviews/inspects all Contractor work prior to any Contractor draw payments being made.
  • The HUD Consultant is compensated in accordance with the HUD fee schedule for the following work products:
    Inspection/Feasibility Study, Work Write Up, Draws, Change Orders, Mileage, and Other Required Consultation items etc.

  • The out of pocket cost to the borrower is generally limited to the initial Inspection/Feasibility Study with the others being allowed to be financed in the FHA 203k Renovation Loan
  • The HUD Consultant works closely with the homeowner and their selected Contractor to ensure the 203K projects are completed in a timely fashion and the final work product is completed in a good workmanlike manner

  • The HUD Consultant is required on a Full/Standard 203K, but may be used on the Limited/Streamline and some lenders allow them to be used for Feasibility on Fannie Mae HomeStyle files also.
  • Knowledge of the programs and how they work allows the Consultant to recommend options to a buyer/homeowner during the process.
  • The 203K option may help save a deal for a home in need of disrepair helping all parties involved.

  • Use of a HUD Consultant for the initial inspection even when not required (limited 203K) can prove beneficial through increased repair requirement accuracy and time savings
  • Some HUD Consultants are also professional home inspectors and/or Structural Engineers and can provide multiple services if applicable.


FHA 203k/HUD Consultants Role

  • Consultants must conduct an inspection of the property identifying FHA and HUD required repairs that meet the Minimum Property Standards to qualify for a loan
  • This inspection can be used in lieu of a general home inspection which will provide both cost & time savings by avoiding two inspections and two fees.
  • Buyers/Homeowners identify any Cosmetic or Desired repairs they would like to include to the Consultant in addition to any required Safety, Health, an Soundness items.

FHA 203k/HUD Consultants Reports

  • Consultant composes an inspection report, which includes a list of Mandatory, Recommended, and Desired repairs
  • From this report buyer chooses what Recommended and Desired repairs they want included based on cost and the consultant reviews the complete list for Feasibility
  • The buyer reviews the complete list and authorizes the Consultant to “proceed with the Work Write-Up Report”
  • The Lender will use the Consultants Work Write Up Report to order the After Improved Appraisal with.

How To Become a 203k/HUD Consultant

General Program Guidelines

FHA Limited 203k

  • Both Purchase & Refinance Allowed
  • Refinances require 2 appraisals (As Is & After Improved Value)

FHA Standard 203k

  • Both Purchase & Refinance Allowed
  • Refinances require 2 appraisals (As Is & After Improved Value)

Fannie Mae HomeStyle

  • Can lend up to 95% of after improved value up to Conforming loan limits
  • 1-4 units properties allowed


  • Newest Renovation Loan Program in the Market
  • Purchase & Refinance allowed


  • Available programs in this category would be specific to properties that require loan amounts over $424,100.00 as of 2017

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