The Home Buyer's Korner

Information presented should be used for educational purposes only.

November 16th, 2013

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Can I Be My Own Contractor?

Any person who completes work on your home improvement or remodel needs to be a qualified contractor and able to complete the work in a timely and professional manner. If you act as your own contractor on an FHA loan the and the lender allows it, you will only be paid for the cost of the materials needed to complete the work for the property.

According to FHA, homeowners and/or buyers doing their own work cannot eliminate the labor cost estimate. If they cannot complete the work for any reason, there must be sufficient money in the escrow account to get a different contractor to complete the work on time. Any money saved may be allocated to cost overruns or additional improvements

Self-help arrangements in which the borrower is performing some or all of the improvements are strongly discouraged by most lender, but a few will allow Self Help if the borrower’s can prove their ability to perform the work in a competent, timely and professional manner is self-evident and easily documented.

Self-help arrangements must meet the following requirements:

  1. Signed and dated Self-Help Agreement.
  2. Written estimates of materials from all suppliers the borrower will use.
  3. Adequate cash reserves/credit sufficient to fund rehabilitation costs until draw requests are processed.
  4. Proof that the borrower is either a General Contractor and has successfully completed rehabilitation projects.
  5. Borrowers who utilize self-help will not be compensated for labor.
  6. Self-help is not an available option in the State of Texas.  

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