The Sleeper – FHAs 203k loan


Contractors make money with the 203k loan.

By Mike Young

Mike Young
203k loans with Mike

I have been baffled and befuddled for years about the 203k loan program. When I got involved with it in 1994 it was an exciting thing to see a loan product for buyers or owners, purchase or refinance, that could also provide monies to make needed repairs. Wow, I thought, this is wonderful. I’ve never stopped thinking that by the way.

I started giving a seminar to the public every week in 1995. I wanted to become and expert on the program and I felt the way to do that was to put myself out there and take on questions about the program and, if I didn’t know the answer, find it and get the info out to the public. It worked and the rest is history. The seminars work very well and they always have for those of you who want to do more 203k loans, simply do more seminars.

I was giving a seminar in 1995 to a group in El Sobrante, CA when it came to the point in the talk where I ask if anyone has ever done a 203k before? This night was special because the normal answer was “no”. This night it was “yes” and I went on to ask “how did it go for you?” The lady indicated it went very well in 1968. We talked a little bit about that project she did as a Realtor and it was all positive. Then I asked how many she had done since then and her answer was “none”. If it had gone so well, I went on, then I can tell you about your project… 1) You were never alone, you had a team of people who knew what they were doing. 2) You did what you were supposed to do and got the paperwork needed of your client to the lender. 3) You acted in a professional manner throughout the process and if something was missing, YOU took it upon yourself to get it and turn it in. 4) Your lender was good at the FHA process (203b) and stayed focused on it.

Is it any surprise that she agreed to all of the above. No. What did surprise me is that she hadn’t done any more after the first one being successful. I asked her why and the answer was that she just didn’t deal in properties normally that fit the FHA price guidelines… she sold in neighborhoods where the FHA loan limits were so low and her home prices were usually more than the loan limits would allow. I wonder if she is doing them today when in her area the loan limits for FHA on a single family home is $729,750? Wow. She is likely retired long ago. But you aren’t. If you are reading this then YOU should be doing what many are doing. Getting the lowdown on this wonderful product but don’t do like so many do and listen to people who tell you a story of a deal gone bad that they heard about from a friend of a friend that thought it was a bad deal. The 203k can be as smooth as my client’s first 203k if you will just find a team to work with. 1) find someone that has done a successful 203k and ask them who their team consists of. Every successful 203k team member will have something to say about that. If they don’t have a team then be a little weary. 2) Make sure their team has completed a few 203k loans and understands the process.

You may be thinking about getting into the 203k and now wonder how do I go about it if Mike just said I need a team and it is my first one? Simple. Do like one of our clients did with her first 203k loan in Columbia SC. She got the facts and heard us speak one day about the team. She added us to her team of experts. I had asked her how fast she can close a standard FHA 203b loan and her answer shocked me. She indicated she had closed them in as little as 17 days. I then challenged her by saying “If you can close a 203b loan in 17 days, you can close a 203k loan in 17 days.” No, she didn’t and it is more common for both a 203b and a 203k to take a little longer than that, typically 30-45 days is quite common. But she listened to the “team” concept of what we were talking about and decided to try one. She concentrated on her part of the loan process and let the team work on the other aspects… her first 203k loan closed in 22 days. We were all surprised and elated except her… She had decided early on that she was going to let the “team” do their part and just concentrate on what she knew best, the 203b portion, and left the team alone to do their part. It worked for her and it will work for you but ONLY if you have a team. This was her first one but she utilized the “Team” concept and it closed fast. Now you can’t keep her away from a 203k, she has no problems looking someone in the eye and telling them it can be done. If you need a 203k team we can assist you in that regard wherever you are in the USA or it’s possessions.

Consumers: It is okay to use a new lender if they have never done a 203k before as long as they are good at the 203b and have a team assembled. Where do you find a lender? Simply contact a 203k Consultant and ask for the names of some of their clients who close the 203k loans fast. They will tell you. If they can’t tell you, call a different consultant.

Mike Young


  1. Thanks for the article Mike.

    From a contractor’s standpoint what specifically is different about doing a 203k project rather than a typical remodel?

    My website ranks well for 203k’s but I’ve never gotten a (local) call to work on one of these projects. I’ve contacted a few lenders who do 203k’s to no avail.

    What’s the secret to breaking into this market as a contractor?

  2. The difference is that your money is held safe in an escrow account waiting for your “draw request”. I see you have contacted some lenders to see about doing some. Well that is a good thing if you are looking for work as a Streamlined “k” contractor certainly. Get on their list if they have one. I would also suggest you add that to your meta tags on your website “203k contractor, streamlined k contractor” something like that might help you get local work. The best recommendation I would offer would be for you to go to the HUD 203k consultant search window and find consultants in your area and ask to be included on their bid list. We are always looking for good contractors.

    I had one that found me, bid and received the job, very competitive and did very good work. Within the following month he had two more jobs from us and then he found one on his own and we set up the financing through one of our lender teammates. This is clearly a “team effort”. Just sounds like you need more teammates.

  3. Excellent information Mike, just goes to show the value of this forum. As a Realtor in Silver Spring Maryland, I have two preferred lenders that specialize in 203k loans. Contact me if you’re interested in teaming up.


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