What is an FHA 203k Consultant?
An FHA 203k consultant will help home buyers by guiding them through the entire process from the application, to dealing with the contractors, and even the inspections while the work is being completed.
What Does an FHA 203k Consultant Do?
An FHA 203k consultant is someone who helps home buyers through the entire FHA 203k loan process. The following list of items are things that an FHA 203k consultant can do for you.
- Initial inspection of the property before you make an offer
- Discuss the work that needs to be done to pass the FHA inspection
- Identify the estimated costs plus a contingency amount in the event that the repairs cost more than expected or additional unexpected issues arrive that need to be fixed.
- Provides the reporting needed for the lender for all of the initial inspections for the home including the pest inspection.
- Provides an estimated inspection schedule for the work as completed so the contractor can get paid along the way.
- The consultant can help with the contractor bid process and guide the home buyer to select the best contractor.
- The consultant can help provide lien waivers to the bank as the work progresses and payments are made.
- The consultant can also help manage the subcontractors if the home buyer is unfamiliar with how the process works or even if they do not know whether the job has been completed properly.
These are just some of the things that the FHA 203k consultant can do for you. Keep in mind, their fees will be based upon how much you ask them to manage for you.
FHA 203k Consultant Qualifications
Each FHA 203k consultant must meet the following qualifications to be approved as a consultant:
- Documented 3 years of experience as a contractor or home inspector
- They can also be a licensed architect or engineer without 3 years of experience
- A resume demonstrating their ability to handle the roles and responsibilities of an FHA 203k consultant. These roles include but are not limited to managing the inspection and draw process, determining the scope of work needed, the costs, ability to read drawings, and more.
These basic qualifications are the minimum requirement. You can interview various consultants and hire whoever you feel most comfortable with.
What an FHA 203k Consultant Does Not Do
While the consultant will help you with the 203k rehab process, they are not going to provide you with any contractor recommendations or remodeling advice. This means they are not architects or designers and will strictly focus on making sure the rehab meets the FHA inspection guidelines and help manage the construction process.
How Much Does an FHA 203k Consultant Cost?
The fees charged by FHA 203k consultants will range between $400-$1000 depending upon the cost of the project and the scope of work that you ask them to manage.
If you are not familiar with construction or even the FHA 203k loan process, then it is worth paying a higher amount to have the consultant manage it all for you. One simple mistake can cost you more than the consultant’s fee.
Do You Have to use an FHA 203k Consultant?
The FHA 203k consultant is not required unless the total rehab budget exceeds $35,000. However, it is recommended that you hire the consultant even if your total cost is less than $35k. The consultant will help you to save money, takes work off of your hands, and makes the lender feel comfortable that a professional is managing the process.
Can the FHA 203k Consultant Fee be Included in the Loan?
One of the great benefits of an FHA 203k rehab loan is virtually all of the associated costs can be rolled into the loan amount. This means the consultant fees can be included in the loan along with any permits.
How to Find an FHA 203k Consultant Near Me?
If you are looking for an FHA 203k consultant, you can find a list of approved consultants here at the HUD website. These consultants have already been vetted so you can feel comfortable in hiring one of them.
The other option is to speak with your lender to see if they can recommend a consultant based upon past experience.
Bottom Line
Hiring an FHA 203k consultant is going to relieve you of the stress and responsibility of managing the construction and filing the lien waivers and paperwork. They are well worth the expense and can actually save you more money than the cost of their fees.