In order to renovate your home, you must use a licensed contractor. Fannie Mae does allow “self-help” projects, but you will be hard-pressed to find a lender willing to fund this type of project. We fall into this category as we do not allow for clients to perform the work themselves. Lenders prefer licensed and insured contractors that have the expertise and time to complete the project. Because you are on a strict timeline, it pays to hire a contractor to do the work.
Contractor Qualification Requirements
When you hire a contractor, they have to meet specific guidelines. The lender must approve the people you hire to do the work on your home. In order for a contractor to receive approval, he or she must provide the filled out HomeStyle Contractor Package, as well as the following documents:
- Copy of current license allowing the contractor to work in the area your home is located
- Copy of adequate insurance policy including liability and workmen’s comp that covers any subcontractors the contractor hires
- Completed Fannie Mae Contractor’s Profile Form
- Completed contract detailing the work on the home, timeline, and costs
It is your responsibility as the homeowner to select the contractor. The lender’s job is to verify that they understand how the program works and how they get paid. You and the contractor will be signing an agreement called the HomeStyle Contractor Package. You do not need to interview several contractors, however, it may be a good idea so that you can get a feel for which contractor has the right experience and qualifications for the job. The lender has the final say, but you must be comfortable with the choice as well. After all, the contractor will complete all renovations on your home. It works to your benefit to check out his references and even see work a portfolio of work completed in the past to help you make your decision.