The short answer to this question is “Yes, in some cases.”  The realistic answer is, “This is probably not a good idea.”

Talk to anyone with a number of years of experience in renovation lending, and they’ll tell you that one of the most common reasons these projects turn into a disaster is because the borrower tried to do the work themselves.  Why? There are a lot of reasons.

First of all, HUD 203K loans help you purchase and repair or rehabilitate a home using just one loan, but the renovation period is not open-ended. The repairs must be completed within six months of loan closing.  Realistically, if you work full time it is highly unlikely that you will be able to devote sufficient time at night or on the weekends to making repairs in the six months allotted.

Also, when you apply for the loan, you have to demonstrate in writing that you are capable of doing the repairs.  Many people are “handy” and they can make minor repairs around their homes, but that’s not the type of experience the FHA 203K loan program and lenders are really talking about.

With this program, borrowers who are going to do their own repairs must provide a letter explaining their ability to perform the work. The letter must include previous experience in the field, previous experience working with the subcontractors, and how they will have the time to manage and complete the job. The explanation you provide may not be acceptable.

In some ways, doing your own work also defeats the purpose of the 203K loan program – or at least is inconsistent with the idea that this is an affordable financing option.  Why?  Because if you do the work yourself, you need to have the money to pay for the materials. No funds are released in advance of the work being completed and inspected so you’re using your out-of-pocket cash for the materials needed to perform the repairs, and you’ll be asked to prove that you have that cash to support the job.  In other words, a program that’s all about financing the cost of repairs becomes a project for which you have to have thousands of dollars of cash available during a short six-month period of time if you end up doing the work yourself.

All of this assumes that you are not a General Contractor by profession. There are other rules and guidelines that apply in that case.  An experienced 203K lender can discuss these rules with you.

Each case is unique, and we wouldn’t want to discourage a borrower who is determined and capable of doing repairs but the 203K program has rules that you’ll need to understand.  That’s why it’s absolutely critical that you work with a lender that has a lot of experience with FHA 203K loans.

HomeBridge is the nation’s largest 203K lender, and members of our team have been working with borrowers for many years.  We are eager to help you buy (or refinance) a home — and renovate or remodel it to fit your needs and desires.

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