203k limited loan - Home Depot as Contractor?

Question

Hello, I’m looking for a licensed contractor to help me with improvements for a 203k limited loan that I just opened escrow with. Most contractors on Angie’s list are charging way too much. Home Depot has better rates. Does anyone know if they will work with my lender on the 203k limited loan where I get ~$30,000 in improvements (not the standard 203k loan). This loan pays 50% upfront and 50% once work is complete and requires the contractor (does not need to be general contractor) to fill out appropriate ppw. Open to any recommendations to contractors that have decent pricing around the 91763 zip code!

Paul Welden · Answer

@Usman Gohar

Home Depot is qualified to do work under the FHA 203k Loan Program but FHA requires the GC on record to sign the HOCA (Homeowner Contractor Agreement) and Home Depot refuses to sign the HOCA.

So, Home Depot, Lowe's, and any other similar big box store will not be allowed to do work under the 203k Loan Program.

There is a list of contractors that have taken it upon themselves to become educated and independently vetted for the 203k. They are called Certified 203k Contractors.

Also, the Limited 203k is the only version of the 203k that has a provision that MAY allow the contractor to receive 50% of the material cost up front, but that's only if the contractor can prove to the lender that they don't have strong finances and need $$$ and then the lender approves their request. In my opinion, any contractor that needs $$$ to start a Limited 203k is a contractor that you should pass on.

Hope this helps!

Bruce Woodruff · Answer

No, No, No, you do not want to use HD as your Contractor. Think about it....they do not have a license, they just pass the work on to other contractors that have signed up with them and then take a % off the top. They are usually more expensive, so I would say you need to look around more.

And more importantly, their quality of work is notorious for being poor, with bad customer support.

Don't even consider it!