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FHA 203k Consultant

A FHA approved 203k consultant is needed on all standard 203k loans to handle the tasks related to work write-up, drawings and construction exhibits. Lately, 203k lenders have also been mandating the services of a HUD 203k consultant for the streamline rehab loan program too.

A 203k consultant’s services, competence and performance are not warranted by FHA. A homebuyer must enter into a separate written agreement that details the services to be performed and the fees to be charged. If no structural or major changes are required, the 203k consultant should be sufficient to get the needed exhibits ready.

203k Consultant’s Fees

In a standard 203k mortgage closing costs, the fee paid to the consultant can be included. FHA 203k consultant guidelines provide clear instructions regarding the fees that must be charged all over the country. The 203k consultant fee is based on the total amount of repair work to be undertaken. Aside from the consultation fee, an extra amount may be charged for covering the consultant’s travel related expenses, especially if the journey involves a distance beyond 30 miles.

Fee Schedule

The fee charged by a 203k consultant is about the same anywhere in the country. The fee amount varies depending on the amount of repair work involved.

If the total cost of repairs is less than $7,500, the fee is $400. The maximum 203k consultant fee of $1,000 is charged for rehab work above $100,000.

Additional Units

If there is more than one unit under a same FHA case number, the 203k consultant may charge additional fee. For each additional unit, a $25 fee is allowed. The HUD stipulated fee schedule only applies to 203k consultants on standard 203k loans.

The amount to be paid for engineers and architects, when needed, are not restricted by the above fee schedule. They, however, must be reasonable for the type of work performed.

A 203k consultant will thoroughly inspect the property and provide all the relevant architectural and construction exhibits along with the complete work write-up.

Site Visit

A borrower should attend the 203k consultant’s site visit. If a 203k contractor has already been selected, then both should attend. The consultant performs a comprehensive property review to ensure its compliance with all the loan program’s requirements.

The borrower must make sure that all the utilities in the subject property are turned on prior to scheduling a consultant’s visit. If not, the 203k lender may require additional amount than the regular contingency reserve.

203k Consultant Requirements

A regular licensed home inspector or contractor can apply to become an FHA approved 203k consultant. In order to get placed on the HUD consultant roster, the following information and documents must be submitted to the regional HUD HOC in the area where they wish to operate.

All the detailed 203k loan program guidelines and requirements can be accessed from the HUD 203k handbook. All consultant applicants must acknowledge and certify that they have fully read and understood the prescribed materials.

For remodeling contractors, general contractors or home inspections, a minimum of three years experience is mandatory. The proof of the relevant state license must be included in the application package. A state certified engineer or architect is exempted from the three years experience requirement.

In addition to the above info, a prospective 203k consultant must also provide a narrative description regarding the candidate’s ability to handle home inspections, drawings and cost estimates.