FHA 203h Requirements

House being rebuiltThe 203 (h) loan program aids disaster victims in their recovery by making it easier for them to get mortgages and establish or re-establish their homeownership.

Individuals are eligible for this program if their house is situated in an area designated as a disaster region by the President and if their dwellings have been destroyed or damaged to the point of reconstruction or replacement. Insured mortgages may be used to fund the acquisition or rebuilding of a single-family house that will serve as the homeowner's primary dwelling.

As with the standard FHA mortgage insurance programs, Section 203 (h) includes provisions that assist homeowners in recovering from a catastrophe.

Section 203(k) Rehabilitation Mortgage Insurance provides property purchasers and homeowners with two options:

  • Take out a single mortgage to fund the purchase or refinancing of a house, as well as the cost of its restoration, or
  • Financing for house renovation.

Program Requirements in General

Types of Eligible Properties:

  • Principal Residences – Single-Family Homes, PUD. Multi-units are prohibited.
  • Existing condominium developments that have been authorized by the FHA

Property Types That Are Not Eligible:

  • Commercial Real Estate
  • Attached Second Homes
  • 2,3,4 Units
  • Cooperatives for Manufactured Housing, Condotels, and Time Share
  • Manufactured and mobile houses are not eligible.

Assistance Provided:

This 203(h) program insures lenders against the risk of loan defaults to eligible catastrophe victims

There is no down payment needed. 100% financing is available to the borrower. Closing costs and prepaid expenditures must be paid in cash or though premium pricing by the borrower or by the seller, subject to a 6% cap on seller concessions.

FHA mortgage insurance

House under constructionLenders collect an up-front insurance premium (which may be financed) at the time of purchase from borrowers, as well as monthly payments(MIP) that are not financed but are instead added to the normal mortgage payment.

Mortgage insurance applications must be filed with the lender within one year of the President declaring a catastrophe.

Applications are submitted through an FHA-approved lending institution, which does so through a process called "Direct Endorsement," which allows them to evaluate applications without submitting documentation to HUD/FHA.

HUD's Homeownership Centers process and administer mortgage insurance for this and other FHA single-family mortgage insurance programs.

The maximum loan amount is limited by the lending limit established by the county.