What happens if we need changes during the renovation? Change orders, extra costs, and staying on budget.

Changes during a 203k renovation are very common. The key is knowing exactly how to handle them so you do not blow your budget or delay the project.

A change order is a formal, written request to add, remove, or modify work that was not in the original approved scope. It could be something small like upgrading light fixtures, or something bigger like discovering you need new plumbing after opening a wall.

Important rule: You must get a change order approved before the contractor starts any extra work. If you let them do the work without approval, you will likely have to pay for it out of your own pocket.

Here is how the change order process works:

1. You or the contractor identify the needed change.
2. The contractor puts together a written change order with a clear description and exact cost.
3. It gets submitted to the HUD consultant and your lender for review and approval.
4. Once approved, the extra work can begin.
5. Payment for the change order is handled according to your lender’s rules. Some lenders will pay for it once the work is completed with photo evidence. Others add it to the next regular draw.

To stay on budget and avoid unnecessary change orders:

• Be as detailed as possible in the original work write-up.
• Make most of your finish selections early.
• Build a healthy contingency reserve. This is typically 10 percent, but the HUD consultant can recommend a higher amount based on the property’s condition.
• Only use the contingency reserve for true surprises, not upgrades.
• Distinguish between “must-fix” items and “nice-to-have” upgrades.

Pro tip. Never tell your contractor “just go ahead and do it” verbally. Always get the change order in writing and approved first. This protects your escrow funds and keeps everyone accountable.

Change orders are a normal part of every renovation. The families who handle them best are the ones who stay organized, communicate clearly, and get everything approved before work begins.

Expect some changes. Plan for them. But manage them strictly. This is one of the best ways to keep your 203k project on budget and on track.