FHA 203k and 203h
One of the most popular home loans in the United States are FHA 203h home loans and FHA 203k loans. While FHA home loans are relatively affordable and easy to get compared to conventional home mortgages, the recent disasters in Houston and other parts of the country have led to different questions from homeowners across the nation.
Property owners in Houston are beginning to wonder what their faith is as regards mortgage for disaster affected homeowners and disaster relief loans. Below is a brief overview of 203h loans for flood victims and how victims of the unfortunate incidence can benefit from the loans.
203h Loans For Disaster Victims
FHA disaster loans are becoming increasingly popular, no thanks to the natural disasters that devastated parts of the State of Texas. To qualify for rehab loans, the property must be destroyed in such as it is deemed uninhabitable. 203h loans allow victims of the hurricane to purchase a new home without making a down payment via a FHA-insured loan.
FHA provides the 203h loans to people that want to buy homes to replace their previous home that was damaged by the catastrophe. The loans allow victims of natural disasters like hurricane who are existing homeowners or renters to purchase new homes not necessarily in the same area where the former property was located.
Qualification Requirements for 203h loans
For victims of a natural disaster to qualify for 203h loans, it is required that a catastrophe has damaged their homes and the homes or rental unit are located in a Presidentially declared disaster area. It is also necessary that the county is on FEMA’s list of major disaster declaration areas.
Applicants can qualify for a FHA-insured mortgage loan without making down payment; it is a full 100% financing. However, it is required that they have a good payment history showing that they can make payments as and when due before the disaster occurred. This is so as late payments after the catastrophe is not a major issue considering their circumstance.
Another requirement to be eligible for 203h loans is that the loans must be initiated within one year of the disaster occurring. Therefore, victims of the recent hurricane Harvey are advised to apply for the loans as early as possible.
Qualification Requirements for Mortgage Loan Borrower
The minimum credit score requirements for 203h loans usually vary from one lender to another. As mentioned earlier, lenders require borrowers to have been timely on all their payment obligations before the disaster.
The maximum front end ratios are 31 percent debt to income ratios, with the maximum back end debt to income ratios being 43%. Gift funds are also not allowed with 203h loans due to the 100 percent financing.
It is also worth noting that sellers’ concessions towards buying closing costs are permitted, similar to what is obtainable with 203b loans, with the concessions capped at 6 percent.
203k Loan for renovation
A hurricane rehab loan that residents of Houston should take advantage of is the FHA 203k renovation loan program. The program provides funds for the purchase and renovation of damaged home packaged into a mortgage loan. The funds for restoration are usually held in escrow once the loan is closed, allowing for the payment for pre-determined renovation work.
203k loan program helps homeowners to overcome the obstacle and stress involved in getting financing for buying a home that needs repair. This is so as the program enables you to get funds for refinancing of property or purchase in addition to the cost of repairs and improvements in one package. FHA-approved lenders extend these loans.
The primary requirements for 203k loan such as credit qualification, down payment, and loan limits are the same as standard FHA-insured loans.
Types of FHA 203k loans
There are two types of FHA 203k loans – standard 203k and streamlined 203k, respectively. The standard 203k is designed for complex projects that prohibit the homeowner from occupying the residence. These projects include structural changes like exterior grading, room additions, landscaping, and renovation. A standard 203k can also be used for engineering or architectural drawings and inspections.
The streamlined 203k is for improvements that are less extensive and projects that are not more than $35,000 in cost in renovation and other such expenses. This type of 203k loans is usually the easier and more affordable option.
203k and 203h loans are ideal for disaster victims, and persons that have been affected by the hurricane Harvey need to harness the inherent benefits of these loans to get their lives back.