FHA Section 203(h) Mortgage Insurance For Hurricane Victims

Have you been affected by the recent hurricane Harvey or any other such major disaster like flood or tornado within the last year? If you, unfortunately, fall into this category of people, FHA catastrophe loans like FHA 203h home loans might be what you need to get your life back. FHA home loans are popular, and they can be beneficial as disaster relief loans. Section 203(h) of the National Housing Act allows the Federal Housing Administration to offer a mortgage for disaster-affected homeowners.


What is FHA?


The Federal Housing Administration otherwise referred to as FHA is a division of the HUD – the Department of Housing and Urban Development. The agency was created out of the National Housing Act of 1934 and was established to help in fixing many of the problems and challenges that the mortgage industry faces. The agency was mainly created to address mortgage issues during the Great Depression of the thirties.


The primary purpose of the office was to reduce down payments on mortgages. The agency was also tasked with the responsibility of increasing home ownership with the insurance of mortgage loans against default. Lenders tend to be more willing to give out their money to borrowers that have been termed ‘high risk.’ This is due to the FHA insuring the loans against the borrower defaulting. Consequently, more people can access mortgage loans easily.


It is worth noting that the Federal Housing Administration does not lend out money. The agency only insures mortgage loans issued by various lending institutions it approved.



How does 203(h) FHA-Insured Loans Work


The 203h loans for disaster victims have become increasingly popular due to the recent occurrence of natural disasters. This has consequently led to the increasing search for hurricane rehab loan in places like Houston, who was recently stricken by Hurricane Harvey.


The FHA 203(h) mortgage insurance program for disaster victims is a program designed to assist victims of disasters. The program helps borrowers in areas declared by the President to be official disaster areas. The program was designed to help disaster victims in the areas mentioned above, during the first year after the occurrence of the catastrophe. It helps them become new homeowners or help persons who lost their homes to the disaster to rebuild it or buy a new one.


The benefits of the FHA 203(h) loans are numerous and quite similar to what other FHA-insured mortgage loans offer. Below are some of the many advantages of the program:


  • No down payment: This benefit is one of the unique features of the 203h loan program, especially when compared with other FHA loan programs. The program allows victims of disasters to finance 100 percent of the home value up to the loan limits allowed in their area.

  • Limited Closing Fees: Like any other FHA-insured loan program, 203(h) home loans have limits set by the Federal Housing Administration. The agency defines many of the fees that can be charged by lending institutions for processing and closing a loan.

  • Relaxed Credit Requirements: In a bid to help disaster victims get back on their feet as soon as possible and considering their condition after such an occurrence, the FHA offers programs to individuals that have relatively marginal credit. This is unlike many conventional loans, and this explains the popularity of FHA-insured loans such as the 203(h) and 203k loans.


How to apply for the loan


As mentioned earlier, if you reside in an area that’s Presidentially-declared disaster area within the last twelve months and your home has been significantly affected by the disaster, you are eligible to apply for the loan.


Like other FHA-insured loans, applications for the 203h home loan and any other such loans designed for flood victims are to be made by approved lending institutions. This is so as the FHA does not provide loans directly. And as mentioned earlier, such applications must be made within the first year following the occurrence.


No one wishes for natural disasters. However, because they are beyond our control, it is only advised that all measures are put in place to facilitate a fast recovery.