--- title: "Residential Performance Bond: What Contractors Need to Qualify" description: "Your customer requires a performance bond. What the surety looks for, what you sign, what it costs, and how to price it into the job." canonical: https://americassuretybonds.com/requirements/homeowner-protection-bond/contractors/ author: "Phil Pavarini, Insurance Agent" publisher: "America's Surety Bonds" date_published: 2026-10-03 date_modified: 2026-10-03 language: en-US --- [Home](https://americassuretybonds.com/) > [Requirements](https://americassuretybonds.com/requirements/) > [Homeowner Protection Bond](https://americassuretybonds.com/requirements/homeowner-protection-bond/) > For contractors # Your customer wants you bonded *What the surety will ask for, what you are signing, and how to price the premium into the job.* By Phil Pavarini, Insurance Agent. > Phil Pavarini is a licensed insurance producer and is compensated when a bond is placed through this site. This page is general information, not legal, tax or fiduciary advice, and it is not a substitute for reading your plan document or contract or for advice from your own counsel. Figures shown are current as of the date on this page. Your customer, or the customer’s lawyer, has written a performance bond requirement into the contract. If you have only ever carried a license bond, this is a different animal, and it pays to understand it before you agree to it. A license bond is a commodity: fixed amount, quick approval, small premium. A performance and payment bond is closer to a line of credit. The surety is guaranteeing that you will finish this specific job and pay everyone on it, and it underwrites you the way a lender would before it puts its name behind yours. ## The rule you need to know first **You cannot buy this bond on your own initiative.** The surety writes it only when the homeowner requires it in a signed contract. A bond offered as a sales feature, to look more trustworthy or win a bid, is declined. If a prospect likes the idea, the path is simple. The prospect writes the requirement and the bond amount into the contract, you both sign, and then you apply. Telling a nervous homeowner that you *can* be bonded if they require it is legitimate and often persuasive. Offering a bond they did not ask for is not something the program allows. ## What the surety looks for - **Good personal credit** for the owners of the business. On smaller contract bonds the owners’ credit carries a lot of the weight. - **Completed jobs of similar size.** A remodeler who has finished ten $80,000 kitchens is a different risk on an $80,000 kitchen than on a $900,000 custom home. - **A signed written contract.** Purchase orders and work orders are not accepted. - **Clear contract terms**: the bond requirement and amount, warranty periods, a liquidated damages amount and payment terms. The fewer open questions about scope, the better the odds of approval. - **Contract price** usually of at least $10,000. Every job is reviewed individually. Approval on one project is not approval on the next. ## What you are signing The business, its owners, and their spouses sign a **general indemnity agreement**. Read it, because it is the most important document in the transaction for you. A surety bond is not insurance for the contractor. If the surety pays a claim, you and every indemnitor owe the money back, plus the surety’s costs and attorney fees. The bond protects the homeowner. The indemnity protects the surety. That is why spouses sign, and why the surety looks hard at credit and experience before it issues anything. The practical consequence is simple: a bond claim is a debt. Treat a performance bond job like a job where your house is on the line, because in some cases it effectively is. ## Pricing it into the job Premium generally runs **3 to 5 percent of the bond amount**, depending on credit, experience and the contract. You pay it, and the contract price can account for it. The clean way to handle it is a line item. If the bond is 100 percent of a $150,000 contract, you are looking at roughly $4,500 to $7,500. Put the bond premium on the estimate as its own line, priced from the actual quote. Homeowners who asked for the protection generally understand that it costs something, and a visible line is easier to discuss than a number buried in overhead. Get the quote before you finalize the price. A contractor who signs at a fixed price and then discovers the bond costs more than assumed has just eaten the difference. ## Step by step 1. Homeowner writes the bond requirement and amount into the contract. 2. Both of you sign the contract. 3. You complete the Homeowner Protection Bond application and attach the signed contract. 4. The business, owners and spouses sign the general indemnity agreement. 5. The surety reviews credit, experience and contract terms, then quotes. 6. The surety provides its bond form, which the homeowner’s attorney may review. 7. You pay the premium and the bond issues naming the homeowner as obligee. Send the homeowner a copy of the issued bond. It is the document they will rely on, and handing it over promptly is part of what they are paying for. ## Why it can be good for your business A bonded residential job is a track record with a surety. Contractors who want to move into commercial or public work eventually need bonding capacity, and that capacity is built one successfully completed bonded job at a time. A homeowner asking for a bond is, quietly, an introduction to the market you may want next. Is the bond requirement already in your signed contract? [Apply for this bond](https://esign.americassuretybonds.com/f/homeowner-protection-bond-application) or read the [full bond details](https://americassuretybonds.com/state/All-States/All-States/Homeowner-Protection-Bond). Related: [For homeowners](https://americassuretybonds.com/requirements/homeowner-protection-bond/homeowners/), [For construction attorneys](https://americassuretybonds.com/requirements/homeowner-protection-bond/construction-attorneys/). ## Common questions **Can I get a performance bond to help win residential bids?** No. The bond is issued only when the homeowner requires it in a signed contract. A bond offered on the contractor’s own initiative is declined. You can tell prospects you are able to be bonded if they require it, and then apply once the requirement is in the contract. **What do I need to qualify?** Good personal credit for the owners, experience on completed jobs of similar size, a signed written contract (not a purchase order or work order) that states the bond requirement, amount, warranty periods, liquidated damages and payment terms, and usually a contract price of at least $10,000. **Why does my spouse have to sign?** The surety requires a general indemnity agreement from the business, every owner and their spouses. If the surety pays a claim, the indemnitors must repay it with costs and fees. Spouses sign so that assets held jointly or in a spouse’s name stand behind the indemnity. **How much will it cost me?** Generally 3 to 5 percent of the bond amount, based on credit, experience on similar jobs and how clearly the contract defines the work. Get the quote before you fix the contract price and consider showing it as its own line on the estimate. **Is the bond insurance for my company?** No. The bond protects the homeowner. If the surety pays a claim, you and the other indemnitors must pay it back, along with the surety’s costs and attorney fees. ## Related guides - [Homeowner Protection Bond](https://americassuretybonds.com/requirements/homeowner-protection-bond/) - [For homeowners](https://americassuretybonds.com/requirements/homeowner-protection-bond/homeowners/) - [For construction attorneys](https://americassuretybonds.com/requirements/homeowner-protection-bond/construction-attorneys/) --- **Phil Pavarini, Insurance Agent.** Licensed insurance producer (NPN 8314541, CA License No. 4481016), licensed in 49 states and the District of Columbia. Has placed probate, fiduciary, court, contractor and commercial surety since 2004, and writes about the bonds he actually files. This website is a referral and informational platform. It is not a surety, an insurer, a bonding company, or a law firm. Bond inquiries may be referred to a licensed agency, agent or carrier for quoting, underwriting and issuance. If you already have a bond, the agent of record and the issuing surety are identified on your bond form, power of attorney, or invoice. Please direct all questions about an existing bond to that party. Content on this site is general information only and is not legal, tax or financial advice. Bond requirements vary by jurisdiction and change frequently. Verify all requirements with the applicable court, agency or obligee. HTML version: https://americassuretybonds.com/requirements/homeowner-protection-bond/contractors/