What Are the Qualifications of a Certified FHA 203(k) Consultant?

 

A Certified FHA 203 (K) Consultant is someone who has met at least one of the four criteria required by the U. S. Department of Housing and Urban Development.  Those criteria are:

  • Be a state licensed architect.

  • Be a state licensed professional engineer.

  • Have at least three years of experience as a remodeling contractor or general contractor.

  • Have at least three years of experience as a licensed home inspector in state that has a licensing requirement for home inspectors.

I am a licensed professional engineer with over forty-six years of engineering experience.  I am also a Licensed Home Inspector who established Capital Property Inspection Service, LLC in September 2018.

 

Who is a Certified FHA 203(k) Consultant?

 

A Certified FHA 203(K) Consultant is a professional who oversees your project to ensure that the project meets the terms of the FHA mortgage.

Is a Certified FHA 203(k) Consultant Required for My Project?

Yes, if you are seeking an FHA mortgage for construction and/or renovation of a home, your mortgage lender will advise you that FHA will require you to retain a Certified FHA 203(K) Consultant to oversee your project.

What Does a Certified FHA 203(k) Consultant Do?

The Certified FHA 203(k) Consultant (Consultant) will inspect the property and prepare a “CONSULTANT 35 POINT CHECKLIST”.  The checklist will include a “Work Write-Up” and cost estimate for each of the 35 points that are applicable.  The Consultant will determine if the project is feasible.  The Consultant will review all architectural / engineering exhibits (plans) that are required for a certified contractor to execute the project.  The Consultant will perform a “draw inspection” to verify the quality of workmanship the contractor has provided and the stage of completion for each component of work that the contractor is requesting to be paid.  If a circumstance develops that requires the scope of work to be modified, the Consultant will prepare the necessary change order documents to get approval for those changes.  For complete details of what a Certified 203(k) Consultant does, refer to the U. S. Department of Housing and Urban Development “HANDBOOK 4000.1 – FHA SINGLE FAMILY HOUSING POLICY HANDBOOK”, page 468-478.  The HANDBOOK is available online at:

https://www.hud.gov/program_offices/housing/sfh/handbook_4000-1

Do I Need a Standard Home Inspection If I Plan to Do an FHA 203(k) Renovation Project?

Yes, you should have a standard home inspection performed for the home you are contemplating purchasing.  A home inspection performed by a Licensed Home Inspector gives the buyer detailed information about the overall condition of the home prior to purchase.  A Licensed Home Inspector will conduct his inspection in accordance with the American Society of Home Inspectors’ “STANDARD OF PRACTICE FOR HOME INSPECTIONS AND THE CODE OF ETHICS FOR THE HOME INSPECTION PROFESSION”.  This information is available to review at www.ashi.org.  This information can be a valuable asset in negotiating the final purchase price of the home.  The Federal Housing Administration (FHA) recommends that a standard home inspection be performed on a property prior to purchase in their publication HUD-92564-CN (6/14).

 

What Is the Difference Between a Standard Home Inspection and an FHA 203(k) Consultant’s Project Report?

A standard home inspection is an inspection performed by a Licensed Arkansas Home Inspector.  This type of report is a visual inspection of the property and it informs the client what the condition of the property was on the day of the inspection in accordance with the ASHI standards.

The FHA 203(k) Consultant’s 35 Point Checklist Project Report must ensure that the property will comply with the U. S. Department of Housing and Urban Development’s “Minimum Property Requirements” (MPR) or “Minimum Property Standards” (MPS) and local requirements.

Examples of how a standard home inspection (SHI) and an FHA 203(k) Consultant’s report (FHA) might differ are:

  • HVAC system – (SHI) might state that HVAC system was operating satisfactorily on day of inspection.  AC unit was manufactured by (name of manufacturer) in June 2000.  (FHA) report might state replace HVAC system manufactured in June 2000 with new HVAC system.  Existing system is 19 years old.

  • Roof covering – (SHI) might state that the roof covering is serviceable with in the design life of the shingles.  An (FHA) report might state replace roofing shingles.  Shingles are becoming brittle and are near the end of their design life.

  • Gutters – (SHI) might state that the house does not have gutters.  Recommend installing new gutters.  An (FHA) report would state install new gutters to protect foundation structure from damage due to water intrusion.

A client should not try to compare a standard home inspection with an FHA 203(K) Consultant’s report.  It would be easy to imagine that the Licensed Home Inspector did not do a satisfactory job with the (SHI).  Trying to compare the two documents is the equivalent of trying to compare an apple to an orange.

How Much Does the Service of a Certified FHA 203(k) Consultant Cost?

The fees that a Certified FHA 203(k) Consultant can charge are set by the FHA.  These charges are:

  • Initial feasibility study - $100

  • Work write-up and review of architectural exhibits:

            Repairs less than $7500                                  - $400

            Repairs between $7501 and $15,000             - $500

            Repairs between $15,001 and $30,000        - $600

            Repairs between $30,001 and $50,000       - $700

            Repairs between $50,001 and $75,000        - $800

            Repairs between $75,001 and $100,000      - $900

            Repairs greater than $100,000                      - $1000

  • Draw Inspection Fee $350 maximum

  • Change order fee $100 per change order request

  • Re-inspection fee $50

  • Mileage fee at current IRS mileage when project is greater than 15 miles from consultant’s place of business.  Currently the IRS rate is $0.58 / mile.