What your contractor needs to document, and how they get paid.
HUD does not keep a list of 203(k) contractors or endorse them. Instead, the lender reviews each contractor's license, insurance, and bid for the specific project. Ken Clark Jr. walks buyers and contractors through what to prepare so the renovation closes on time and draws move smoothly.
Short answer: no. HUD does not license, list, or endorse contractors for the 203(k) program. The lender reviews the contractor's documents for each loan.
That review is about loan eligibility, not a recommendation. You still choose your contractor and should check references, reviews, and your state licensing board yourself. Be cautious of anyone who markets themselves as endorsed by HUD for 203(k) work.
Short answer: proof they can legally do the work, proof they are insured, and a bid the lender and appraiser can follow.
| Item | What lenders commonly look for |
|---|---|
| License | Active state or local contractor license where required, matching the type of work |
| Insurance | General liability certificate; workers' compensation where required |
| Business information | Legal name, address, tax ID (W-9), years in business |
| References | Recent jobs or customer references, depending on the lender |
| Itemized bid | Line items by trade with materials and labor, permits, and a clear total |
| Contractor agreement | Signed agreement acknowledging the draw process and timeline |
| Subcontractors | Licensed trades for electrical, plumbing, and HVAC where required |
Exact requirements depend on the program, the state, and the scope. In New Jersey, home improvement contractors must register with the Division of Consumer Affairs. In California, check the Contractors State License Board.
Short answer: specific. Each line should say what is being done, where, with what materials, and at what cost.
Vague bids like "kitchen remodel, $40,000" slow everything down. Better: cabinets (style, linear feet), counters (material, square feet), sink and faucet, electrical updates, permits, and disposal, each with a price. On a Standard 203(k), the HUD roster consultant's work write-up and cost estimate must line up with the bid. See the consultant's role.
Short answer: in draws. Renovation funds sit in an escrow account after closing, and money is released after work is completed and inspected.
Draws cover work in place only. Materials stored off-site are not advanced. Contractors who are used to large deposits should plan cash flow accordingly, and ask about any upfront amount allowed under program guidelines. More on draws: draw process.
Short answer: license, insurance, comparable bids, and experience with draw-based loans.
Educational illustration only. Not an actual client, loan offer, or commitment to lend.
A licensed remodeler bids $64,000 on a Limited 203(k): roof, windows, bath remodel, and flooring. The lender asks for a license copy, liability and workers' compensation certificates, a W-9, and an itemized bid. After closing, the contractor completes the roof and windows and requests a draw with a lien waiver from the roofing supplier. Funds are released after inspection. The bathroom and floors follow, then a final inspection and final draw.
Where available: PRMG renovation programs are available in every state where PRMG is licensed, which is all states except New York, including California and New Jersey, for eligible borrowers and subject to underwriting and program guidelines.
Answered by Ken Clark Jr., Certified Mortgage Advisor. Program availability and requirements vary and are subject to change.
No. HUD does not endorse or keep a list of 203(k) contractors. The lender reviews each contractor's license, insurance, and bid for the specific loan.
An active state or local license where required for the type of work. Requirements vary by state.
General liability insurance, and workers' compensation where required by the state. Some programs set minimum coverage amounts.
In draws from an escrow account after work is completed and inspected, commonly with lien waivers.
Draws are for completed work. Any upfront amount depends on program guidelines and is limited. Plan on being paid after work is in place.
No. Draws are for work in place, not materials stored off-site.
Plan on hiring a contractor. Borrower-performed work is limited and subject to lender guidelines.
Usually the contractor, as required by the local building department.
The lender and, on a Standard, the consultant work with you to document completed work and bring in a replacement contractor. Choosing carefully up front matters.
Yes, commonly, but licensed trades such as electrical and plumbing must meet local requirements.
Guidelines change. Verify current program requirements with Ken Clark Jr. before relying on them for a transaction.
Disclaimer: This content is for educational purposes only and is not a commitment to lend, a guarantee of approval, or a rate quote. Loan programs, down payment requirements, terms, and eligibility depend on borrower, property, project, builder, and program qualifications, are subject to underwriting, and vary by state. Not all applicants or projects will qualify. Builder registration is a documentation review for program eligibility and is not an endorsement of any builder. Equal Housing Opportunity. Paramount Residential Mortgage Group, Inc. (PRMG), NMLS #75243. Ken Clark Jr., NMLS #225375. PRMG is licensed in 49 states, excluding New York.
Certified Mortgage Advisor and Branch Manager at PRMG Mortgage (NMLS #75243). 28 years in mortgage lending. Specializes in FHA, VA, conventional, DPA, jumbo, Non-QM, renovation, and construction financing for buyers and investors in Sacramento, New Jersey, and nationwide. PRMG is licensed in 49 states, excluding New York. Three-time Gold Award winner for Highly Reviewed Mortgage Team in Sacramento (2023, 2024, 2025). NMLS #225375.
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