203 K Consultant NJ

Dear Valued Client,

I’d like to take this opportunity to explain my role as a consultant in the 203(k) loan program or the FNMA HomeStyle loan program in the U.S Department of housing.

203(K) Program: The role of the Consultant

Most 203K consultants are licensed home inspectors, general contractors, and sometimes architects. They are responsible to submit various documents to the U.S Department of housing that proves their expertise to HUD – the Department of Housing and Urban Development based on the fairly rigorous requirements. Only HUD-approved consultants are listed on the official FHA 203K Consultant Roster. The 203k consultants make a lot of difference during the home inspections if you are planning to take a home loan or renovation loan for a new property or remodeling the existing one.

Site Visit: The site visit is an opportunity for the 203k consultant to grasp the concept of the housing and urban development project for the write-up. It is helpful to forward any architectural plans or reports of the home inspections before the site visit. If they are unavailable, no worries, forward them when you can. Also, it is the job of the consultant to identify any items that would need to be addressed as per the US Department of Housing and Urban Development (HUD)’s Minimum Property Requirement, Minimum Property standards, and local requirements. The fee for the write-up is due at the time of the site visit.

Work Write-Up and Cost Estimate: The 203k consultants prepare a work write-up and cost estimate that details the necessary repairs and wish list items. The consultant also uses the SOR to prepare a lender packet of required documents and a contractor’s bid packet. The General contractor’s estimate must match the Specification of Repairs(SOR) and price estimate. Once housing and urban development construction are underway, the specification of repairs and cost estimate will serve as a guide for paying out the general contractor. As work is completed, it will be paid out as it is itemized in the SOR.

Draw Inspection: Once the housing and urban development construction has started, the lender requires a draw inspection every 30 days to ensure progress is moving forward. However, the borrower may schedule draws at any time if there has been substantial progress. During the inspection, the consultant will evaluate the completion of the items on the SOR. Completed items will be paid out. Partially completed items will be paid in proportion to the rate of completion. The contractor is required to sign a Waiver of Lien for the funds distributed. 10% of the gross funds will be held back until the final permits are closed out. The contractor will receive a check for 90%. This is usually mailed to the borrower’s address.

As per the U.S Department of housing, a loan with an anticipated full-term duration of 6 months will require 5 draw inspections. On the 5th and final draw, permits are required to be closed out and the 10% holdback will be distributed.

Change Orders: Any work order that is outside of the original Specification of Repair must be reviewed by the 203k consultant. The consultant must prepare a Change order. The funds for the change order come out of the contingency funds.

203(K) Program: Consultant Fees

Write-up fee: The write-up fee will be paid at the time of the site visit. Please be advised, this payment is non-refundable. The payment schedule is determined by HUD and listed in handbook 4000.1. The write-up fee is paid based on the estimate of repairs:

  • $400 for repairs less than $7,500
  • $500 for repairs between $7,501 and $15,000
  • $600 for repairs of $15,001 and $30,000
  • $700 for repairs between $30,001 and $50,000
  • $800 for repairs between $50,001 and $75,000
  • $900 for repairs between $75,001 and $100,000
  • $1000 for repairs over $100,000

Draw Inspection Fee: The 203k consultant will be paid an inspection fee of $250-$350 per draw inspection. This fee is built into the loan.

FNMA HomeStyle Loan Program:

The HomeStyle loan program is similar to the 203(k) program. However, the use of funds may be a bit broader. For example, you cannot use 203(k) funding to install a pool but you can through a HomeStyle loan. Ask your lender about which program better suits your needs. The lender may require a consultant on larger projects. Functionally the consultant’s role is the same in both programs. We use the 203(k) consultant fee structure identified above for HomeStyle loans.

Write up fee: The write-up fee is paid by the borrower at the time of the site visit. Please be advised, this fee is non-refundable.

Should you have any questions about the loan programs feel free to contact us. We will be more than happy to assist.

Best Regards,

Devon Clancy


705 Brooklyn Blvd.
Sea Girt, NJ 08750

TEL : (732) 710-9870


Monday – Saturday: 8:00 AM to 6:00 PM

Sunday: 8:00 AM to 12:00 PM