How will I get paid as a 203K Contractor? (Philadelphia)

Home Inspector with Reading, Pottstown, Norristown, Philadelphia

How will I get paid as a 203K Contractor? (Philadelphia)

 203k contractor

As a 203K Consultant and Home Inspector in the Philadelphia area, I often get asked how the 203K contractor will get paid during the 203K process.

A 203k loan is an FHA Loan that allows you to purchase a home that needs $5,000 or more in renovations or updating.  One of the many benefits of this program is that you get ONE LOAN that funds the purchase AND all rehab costs, inspections fees and even 6 month’s carrying costs.  You can learn more by clicking The 203K program (Philadelphia).

So, you are a contractor that decided to participate in the 203K process and you wonder "How will I get paid?"
 new kitchen philadelphia
The 203K mortgage includes money set aside by the lender for the renovations in what is essentially a "Repair Escrow". As the work is completed, the 203k Inspector will be called to schedule a "draw inspection" of the rehab work completed. The 203k inspector will determine how much of the work is completed and only the line items that are completed will be paid (minus a 10% holdback).
For example, if the 203K contractor hung drywall but did not yet skim and sand the drywall, you can expect the 203k Consultant to approve 1/3 of the total line item for Drywall.

203k contractors need to be aware that they are not paid for materials upfront.  There are certain special exceptions to this rule and is different with every bank.  It is best to inquire with the bank's 203K department to get more information about any special exceptions.

All parties (borrower, contractor and inspector) must sign the Draw Inspection paperwork before the 203K inspector can submit the Draw request to the lender.

How Long Does it Take to Process a Draw?
The owner or contractor should give the 203k Inspector a few days notice to schedule the draw inspections.  As the 203K inspector, I turn the paperwork around within 24 hours to the bank as long as I have signatures from the borrower and contractor right away.  The Lender then processes the Draw in 3-7 business days. The Lender sends a 2-party check to the address of the property or the borrowers current mailing address (depending on what the borrower specified to the loan officer).
The 2-party check is usually sent by 2nd day air.  This means that the total Draw processing time is usually 7-10 days. Remember that 10% of EACH DRAW will be held back until the job is completed and the Final Inspection is processed. That 10% goes into a ‘Hold Back’ account to make sure all work is completed and that no mechanic’s liens were filed.  This is paid to the borrower after a title search is completed at the end of the job.

The 203K program can be a great opportunity for contractors as long as they understand the process upfront!


 203k contractor

David Artigliere is owner of ARTI Home Inspections LLC and is a Home Inspector and 203K consultant in Philadelphia and surrounding areas. 

He can be reached 7 days a week at (610) 220-1907.


Posted by

david the home inspectorDavid Artigliere, owner of ARTI Home Inspections LLC, is a home inspector in Pottstown, Reading, Norristown, Royersford and surrounding areas. 

He is available 7 days a week and can be reached at 610-220-1907.


Re-Blogged 3 times:

Re-Blogged By Re-Blogged At
  1. Margaret & Martin Jackson, Tampa Florida Home Team 05/16/2012 02:26 AM
  2. Roy Kelley 05/17/2012 12:02 AM
  3. Gloria Todor 06/15/2012 12:14 PM
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Michael Maynard
New Neighbors Realty - Milford, CT
"Welcome Home!"

Great post, wish I thought to write this as well. They are more popular today and contractors need to know.

May 15, 2012 11:58 PM #1
Eagle Ridge Realty
Eagle Ridge Realty - Gilroy, CA
"Our Performance Will Move You!"

Thanks for this post Dave.  It is well written and it was something I always wondered about.

May 16, 2012 12:37 AM #2
Jack O'Neal
Conway Real Estate - Gilbert, AZ

203 's can be a pain, unless all parties know what they are doing. The biggest issue I run into is the , the buyer not wanting to use a licenced contractor or a family member.

May 16, 2012 12:48 AM #3
Kimberley Kelly, SFR, HAFA, GREEN
HK Lane, Christie's International Affiliate, 760-285-3578 - La Quinta, CA
I do Real Estate like I played polo-to WIN!

So interesting..thank you!

May 16, 2012 06:02 AM #4
Kwee Huset
Kwee Huset Realty - Venice, FL
Venice Florida Homes For Sale

David, it is an interesting post about how will a 203K contractor get paid. Thanks for sharing. 

May 16, 2012 12:06 PM #5
Kevin O'Rourke - Keller Williams Miami Beach Realtor
Keller Williams Miami Beach Realty - Miami Beach, FL
CDPE Miami Short Sale Agent 305-520-9436
Hey David, thanks for making this so easy to understand. I have not worked with any buyers using this loan yet, but I understand it can be a great way to build equity and get a home built to a buyers own taste.
May 16, 2012 12:10 PM #6
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

The 203K program is great...It is good for folks to know about this program and how it works.

May 16, 2012 12:20 PM #7
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

David, great post about 203k program! Love it when we educate buyers that are not familiar with this great program

May 16, 2012 02:45 PM #8
Lawrence "Larry" & Sheila Agranoff. Cell: 631-805-4400
The Top Team @ Charles Rutenberg Realty 255 Executive Dr, Plainview NY 11803 - Plainview, NY
Long Island Home and Condo Specialists

Nice way to promote you and your business and to get the word out about 203k programs to consumers so that it's easy to understand!

May 16, 2012 07:24 PM #9
Charita Cadenhead
Keller Williams Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)

Another great consumer driven post.

May 16, 2012 08:35 PM #10
Keith Lawrence
RE/MAX Properties - Mahwah, NJ
ABR, CDPE, SFR, 203K Specialist

Great post.

Most of my 203k clients use the streamline loan.

May 16, 2012 10:07 PM #11
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

Good information for contractors that are doing 203(K) work.  Many contractors do not know the process.

May 16, 2012 11:56 PM #12
David Artigliere
Reading, Pottstown, Norristown, Philadelphia - Collegeville, PA
ARTI Home Inspections, ASHI Certified Home Inspect

Michael- thanks.  I seemed to be getting this question more and more, so now I can just send them the link to this blog and save myself a 10 minute phone call!

Eagle Ridge- glad you found this informative.

Jack- 203K's can certainly be a challenge, especially when you have contractors involved that aren't onboard with the process.

May 17, 2012 05:51 AM #13
David Artigliere
Reading, Pottstown, Norristown, Philadelphia - Collegeville, PA
ARTI Home Inspections, ASHI Certified Home Inspect

Kimberly & Kwee- thanks for reading!

Kevin- stick around long enough and you are sure to get one! haha.  Actually, it's a great program to let your buyers know about if they don't mind putting some work into a home.  They can get some great deals out there.


May 17, 2012 05:53 AM #14
David Artigliere
Reading, Pottstown, Norristown, Philadelphia - Collegeville, PA
ARTI Home Inspections, ASHI Certified Home Inspect

Joan- yes, the 203k program can be great for buyers and the sellers looking to unload a property that needs work.

Endre- I agree.  I hope this does a great service to buyers or contractors looking at participating with this 203K program.

Larry & Sheila- I feel the best way to promote myself is with information and credibility.  My clients trust that I'm the expert!

Charita- yes!  thank you.


May 17, 2012 05:56 AM #15
David Artigliere
Reading, Pottstown, Norristown, Philadelphia - Collegeville, PA
ARTI Home Inspections, ASHI Certified Home Inspect

Keith- I just did a home inspection for someone wanting to do a 203k streamline loan.  They wanted to get an idea of exactly all the repairs they would have to budget for and still needed to know the true condition of the home prior to purchasing it.

Roy- exactly right!  More and more contractors and interested in the 203K process but don't know how to get started. 

May 17, 2012 05:57 AM #16
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

David, this is an excellent post for those buyers doing a 203 rehab loan!   Great info and congrats on the Feature!

May 17, 2012 10:35 PM #17
Hannah Williams
Re/Max Eastern inc. - Philadelphia, PA
Expertise NE Philadelphia & Bucks 215-953-8818

David ..I missed this one ..Excellent post and a great explanation of a 203 K rehab loan and how it works

Congrats on the well deserved featured post !

May 18, 2012 03:00 AM #18
Gloria Todor
Century 21 Absolute Realty - Springfield, PA
& Doug Durren (484) 431-3686 in SE PA

Hi David, Thank you for writing this post.  It is very helpful.  Congratulations on the Feature.

All the best.


Jun 15, 2012 12:11 PM #19
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

Congratulations on the featured post. I will share this with buyers.

Feb 13, 2016 09:43 PM #20
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David Artigliere

ARTI Home Inspections, ASHI Certified Home Inspect
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