If you have been the victim of a major disaster then the Federal Housing Administration (FHA) may have a solution to help you. The FHA offers mortgage insurance to help such victims rebuild or purchase a new home under Section 203(h) of the National Housing Act.
How does the FHA 203(h) Loan Program Work?
The FHA 203(h) mortgage insurance program for disaster victims was created to help victims in Presidentially designated disaster areas get back on their feet. Its purpose is to help those victims become home owners or for those who previously owned a home in the disaster area, to rebuild or purchase a new home.
Like all of the FHA mortgage insurance programs, the FHA 203(h) program reduces lender risk by insuring mortgages made to disaster victims against default by the borrower. This makes mortgages for borrowers in these disaster struck areas more available.
The FHA 203(h)-insured loan offers many of the same benefits as the FHA’s 203(b) mortgage loan and more. Some features of this program for disaster victims are:
- No down payment: Unlike the 203(b) mortgage, borrowers with loans insured under Section 203(h) are eligible for 100% financing.
- Limited Fees: Many of the fees normally charged by lenders for conventional mortgages are capped under the FHA program. Other fees like property appraisal and inspection fees are actually set by the FHA.
- Loan Limits: HUD sets FHA loan limits depending on the area where the property is located.
All of these features help to make home ownership more obtainable for individuals in areas struck by disasters.
Applying for an FHA 203(h)-Insured Loan
Again, if your home was severely damaged or destroyed in an area that was subsequently declared a Federal disaster area by the President then you are eligible to apply for assistance under this program. Application for an FHA 203(h) loan must be made within one year of the area being declared a disaster area.
