OVERVIEW: The U.S. Department of Housing and Urban Development provides funds to help victims in Presidentially designated disaster areas recover by making it easier for them to get mortgages and become homeowners or re-establish themselves as homeowners. As part of this program mortgage insurance is provided to protect lenders against the risk of default on loans to qualified disaster victims whose homes were destroyed, or require reconstruction or replacement. Insured loans may be used to finance the purchase or reconstruction of a one-family home that will be the principal residence of the homeowner. This program, also called Section 203 (H), offers the following features that make homeownership easier:
- No down-payment is required. The borrower is eligible for 100% financing.
- Some fees are limited. FHA rules impose limits on some of the fees that lenders may charge in making a mortgage.
HUD sets limits on the amount that may be insured. The current FHA mortgage limit ranges from $200,160 to $362,790. These figures vary over time and by place, depending on the cost of living and other factors (higher limits also exist for two- to four-family properties).
TIMETABLE: The borrower’s application for mortgage insurance must be submitted to the lender within one year of the President’s declaration of the disaster.
APPLICATION PROCESS: Applications are made through an FHA-approved lending institution. Mortgage insurance processing and administration for this and other FHA single-family mortgage insurance products are handled through HUD’s Homeownership Centers.
WHERE: See the program’s homepage.
TAGS: housing, funding, other