“FHA 203K Loans”

“FHA 203K Loans”




Hi Joe

 I know it’s been a while.  Kim and I have been working with our agent Shirley looking for houses with very little luck but we have found a few that we really like, but all need some work cosmetically, minor work inside like appliances, electrical, plumbing etc. 

All with good bones, but are bank owned. It could be good for fha loan but need a 203 k to finish work. How does the 203k loan work? If we get an outside contractor, does the contractor have to wait for their money or is it available for payout?   This is where I think we need your help as our agent really has very little knowledge about this mortgage? Any thoughts on what we do next to get the ball rolling, also do we need another pre approval? We really need to get into a house of our own!

In advance, Thanks Kim and Scott


Unfortunately not all Realtors know and understand the FHA 203K process, especially when it comes to where the renovation dollars are concerned. There are basically two different 203 K loans, one that is under $35,000 and a FULL K which means over $35,000 in renovation costs. There are many different aspects but for this purpose. I only want to address how the money is paid out.


For the under $35,000 there are usually 2 draws for the money, the first will happen shortly after the closing (even though the work is not yet completed) and the other at the end of the project when the work has been completed.


For the FULL 203K there are a minimum of 2 and there can be many more. It usually depends on the needs of the contractor. In most cases, work has to be completed before a draw is paid out. I once had a transaction that had 7 draws, but we do what we can to limit the number of inspections as there is a fee charged each time.


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Joe Petrowsky, NMLS #6869

Right Trac Financial Group, Inc. NMLS #2709

110 Main St.

Manchester, Ct. 06042

Office: 860 647-7701 x116

Fax: 860 647-8940

Cell: 860 836-9294

Email: joe@righttracfg.com



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Joe Petrowsky does not guarantee nor is in any way responsible for the accuracy of the information provided herein, and provides said information without warranties of any kind, either expressed or implied.

Equal Housing Statement: We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. We encourage and support an affirmative advertising and marketing program in which there are no barriers to obtaining housing becuase of race, color, religion, sex, handicap, familial status, or national origin.

Comment balloon 4 commentsJoe Petrowsky • December 30 2016 04:49PM


Top of the morning Joe.  I do not know, nor pretend to know all the in's and out's of the lending world.  And that is exactly why I have trusted team members such as yourself that I can go to myself or refer clients to.  Trusting you to make it a great day today.  Mark

Posted by Mark Don McInnes, Sandpoint, North Idaho Real Estate - 208-255.6227 about 1 year ago

Thanks for the information - I didn't realize there was a charge for each draw made. I hope it's a small one!

Posted by Kat Palmiotti, The House Kat (Grand Lux Realty, 914-419-0270, kat@thehousekat.com) about 1 year ago

Good morning Joe. You are being nice about some Realtors. The fact is many loan officers don't understand and don't get involved! Enjoy your day!

Posted by Wayne Martin, Real Estate Broker (Wayne M Martin) about 1 year ago

I understand the 203K and over the years is has simplified from it's origins. I don't deal with clients who do 203Ks but I would always want to work with a totally knowledgeable lender. This is not time for on the job training.

Posted by Joe Pryor, REALTOR® - Oklahoma Investment Properties (The Virtual Real Estate Team) about 1 year ago