How You Can Help During a Disaster

October 1, 2020

In addition to the devastation experienced by so many families and businesses due to the pandemic, havoc has been wreaked on homes nationwide by several natural disasters, as well. There have been many “major disaster declarations” by the Federal Emergency Management Agency (FEMA) in recent months. From mudslides in Kentucky, Mississippi and Washington state, Gulf states affected by hurricanes Sally and Laura, and fires raging again in California, 2020 has been hitting homeowners, hard.

If you are a loan originator, you can help!

Did you know there is a specialty Federal Housing Administration loan program that provides up to 100% financing to help victims of disasters purchase new properties or rebuild after their homes have been substantially damaged?

The FHA 203(h) Mortgage Insurance for Disaster Victims Program is available for the purchase or reconstruction of owner-occupied single family homes.

In the immediate aftermath of a disaster, victims are likely to seek temporary housing. In the short term, the focus will be on establishing their own safety and that of their loved ones. Once the situation is stable, attention can be paid to figuring out where to live long term. Thankfully, eligibility for this program begins as soon as the U.S. President declares the disaster and remains available for one full year from that date of declaration.

Homeowners whose homes have been destroyed may choose to rebuild. The FHA 203(h) program offers one of the few 100% financing options for home construction. Financing is also available to purchase a new home, for both homeowners and renters who have been displaced.

To qualify for this program, the borrower’s home must be located in a presidentially declared disaster area and have been destroyed or severely damaged. The previous home may have been owned or rented, but the damage must be extensive enough that it must be replaced, rather than simply repaired. The borrower will need to be approved for the new loan, as with other programs.

If a borrower doesn’t qualify for an FHA 203(h) loan, or this program doesn’t meet the needs of their scenario, there are a few other programs to consider. To finance a home purchase and renovations to the property, an FHA Standard 203(k) loan may be a good fit. For other zero money down options, VA or USDA loans may be considered. Or if a low down payment mortgage is needed, without the displacement requirement, an FHA 203(b) loan is worth exploring.

Losing your home to a natural disaster can be devastating. Thankfully, with up to 100% financing, and a variety of term options available from 10- to 30-years, the FHA 203(h) program means you can help homeowners rebuild or move on.

AFR is proud to offer the FHA 203(h) program. Contact us to learn how you can help bring even more families home.