Your contractor is the most important person on a renovation loan after you. Underwriting approves the contractor along with you, and the draw process depends on the contractor submitting clean paperwork on time.
What Philadelphia requires
- Pennsylvania Home Improvement Contractor registration. Contractors doing home improvement work on residential property in Pennsylvania generally must be registered with the Attorney General's office. In Philadelphia, that registration, along with City tax accounts and required insurance, lets contractors pull permits for most work on one- and two-family homes.
- Licensed trades. Electrical and plumbing work requires licensed electricians and plumbers.
- Insurance. General liability, and workers' compensation if they have employees. The City sets minimum coverage for permit applicants.
- Permits from L&I. Your contractor pulls permits for the work. On the suburban side, each township or borough issues its own.
What we look for on a renovation loan
- Registration and license numbers we can verify.
- Certificate of insurance naming the required coverage.
- A detailed, itemized bid. Line items by trade and by room, with materials and labor. A one-line "kitchen: $40,000" won't pass.
- A signed contractor agreement that acknowledges the draw process.
- References, ideally from other renovation-loan jobs.
- Lead-safe practices. Almost every Philadelphia rowhome was built before 1978. Contractors disturbing painted surfaces should be EPA RRP (lead-safe) certified.
Red flags
- Asks for large cash deposits outside the loan
- Won't provide an itemized bid
- Can't produce proof of registration or insurance
- Pressures you to skip permits
- Bid is far below the others. That usually means something's missing.
Get two or three bids
On a Standard 203k, the HUD consultant's cost estimate gives you a benchmark. On other programs, two or three detailed bids protect you from overpaying and help the appraiser. We'll review the bids with you before you pick.
Frequently asked questions
Can my contractor be unregistered if the job is small?
No. For renovation-loan work, we need a contractor who is properly registered, insured, and able to pull the required permits, no matter the size of the job.
Does the contractor get paid up front?
Generally not in full. Renovation loans pay in draws as work is completed and inspected. Some programs allow limited up-front funds for materials. Your contractor needs enough working capital to start the job.
Can you recommend a contractor?
We can share names of contractors who have completed renovation loans with us. You choose, and we still vet their paperwork on your file.