FHA Hurricane Relief Loan Programs to Replace Homes
The FHA 203h homes loans are famous for being one of the best disaster relief loans due to the relative ease and affordability of getting them. This is particularly true when compared with traditional mortgage loans from conventional lending institutions.
As a mortgage for disaster-affected homeowners, 203h loans for disaster victims are used for replacing homes that were destroyed in disasters, like the most recent hurricane Harvey. These FHA disaster loans can be used to either rebuild a home destroyed by flood or for the purchase of a new home elsewhere. Like many FHA home loans, the down payment and other such requirements are somewhat lenient when compared to other mortgage loan programs.
The Federal Government backs home loans for victims of natural disasters that intend to replace their homes after the calamity. Under the Federal Housing Administration’s Section 203(h), also known as the FHA 203h program, survivors of a catastrophe are eligible for FHA-insured loans for buying homes elsewhere.
With these loans, The Federal Housing Administration insures mortgages made by FHA-approved lending institutions to disaster victims. However, such property must be located in Presidentially-declared disaster areas, according to the HUD.
Who is the loan for?
A 203(h) loan can be used to purchase another home elsewhere as a replacement of their current home devastated by a natural disaster. According to Walter Walker Jr., the director of education for the Housing & Education Alliance, a HUD-approved housing counseling agency in Tampa, FL, “the loan is for persons looking to rebuild their home and is likely to face some challenges with being able to borrow. Therefore, the Federal Housing Administration makes it easier for such people to qualify for that loan by relaxing some of their guidelines.”
Eligibility for an FHA 203(h) loan
People that do not have an FHA-insured mortgage before the disaster are still eligible to enjoy the benefits of Section 203(h) program. FHA also relaxes many of its requirements like the minimum down payment, allowing borrowers to receive 100% financing. The minimum credit score requirement varies from one lender to another. However, if a borrower’s credit profile is not up to par, lenders may overlook that and only base their qualification on the borrower’s credit before the catastrophe. Credit history requirements are relaxed for victims of disasters since many have late debt payments after the unfortunate occurrence.
The Federal Housing Administration also relaxes income and employment requirements for disaster victims. This is so as they might be forced to look for new employment, temporary one or might have lost their employment documentation due to the disaster.
Interested persons can apply for the loan via any lender approved by the FHA. It is required for the applicant to provide proof of living in the disaster area as well as evidence of the destruction of their home.
The process of application is similar to the FHA standard loan program, usually, takes an average of between 30 and 90 days.
The Federal Housing Administration is particularly helpful where disaster victims have issues of valuation. This is usually the case where a whole community was wiped out by the disaster like in the case of Hurricane Harvey and some neighborhood in Houston. In such cases, non-FHA lenders are usually reluctant to offer a mortgage for reconstruction. This makes FHA-insured loans like 203h home loans and 203k loans attractive and helpful to disaster victims.
Other types of renovation loan
The question of when the home needs repairs and not a total reconstruction arises. This is where 203k loans come in particularly handy. FHA’s Section 203(k) program is the primary insurance program for repair and rehabilitation of damaged single-family homes.
Houston residents that have been affected by Hurricane Harvey and are looking for hurricane rehab loan, this is the right type of loan to get. Section 203k loans allow homeowners and buyers to finance the purchase of a home as well as the cost of rehabilitation of the house. The mortgage loan also enables such individuals to fund the restoration of their damaged home.
Before choosing the loan program that suits you, it is essential to assess your need, whether it is a new home or rehabilitation of your existing one.
While we empathize with the victims of the hurricane and wish them fast recovery, we hope that they take advantage of the FHA-insured loans designed to take care of disaster victims.