Natural Disaster Assistance – Boston Real Estate News

Hurricane Sandy cut a path through the Boston area and whole of the Northeast Coastline, leaving damaged homes and businesses in her wake. Fortunately, there is a government assistance program available which is not widely known that can help victims of disasters rebuild or purchase a new home to start over in.

A Federal Housing Administration (FHA) 203(h) loan is available for those people that are affected by a wide range of natural disasters; hurricanes, tornadoes, floods, earthquakes, severe storms, landslides and mudslides. It is there for people in presidentially designated disaster areas.

Image credited to PBS.org

The main intention of this loan is to assist those who had to put all of their received insurance settlement money into paying off their prior mortgage loan on their annihilated dwelling. Once the insurance settlement money is used, homeowners of destroyed properties have no money left to rebuild or buy a new home so they have a hard time starting over. Renters may also be able to access the 203(h) loan to purchase a home if their rental property was destroyed.

Exactly how does the FHA 203(h) loan work? It functions similar to other FHA loans but mainly reduces lender risk to disaster victims, which makes qualifying easier with participating banks and mortgage companies for victims of disasters.

Here are some general elements of the FHA 203(h) loan:

  • No down payment: Insured loans under the 203(h) FHA loan are eligible for 100% financing.
  • Limit on fees:  Lender fees which are commonly charged for standard mortgages are capped under this FHA loan.  The FHA sets other fees like appraisals and inspections.  Closing costs can be financed by adding to the loan amount.
  • Limits on Loan:  This is dependent on the devastated area where the property location is and HUD (Dept. of Housing & Urban Development) sets the FHA loan limits.  Loan amount maximums under FHA loan programs vary in Massachusetts by county as well as number of units on the property.

3 key points to obtain an FHA 203(h) loan are:

  • The destroyed property must be located where the President has declared it a national disaster area.
  • Need to give proof of evidence that property was destroyed beyond the point of repair and replacing is required.
  • Applications must be received within 1 year of the disaster.

The widespread impact of Hurricane Sandy may allow you to apply to this program if your home was lost to this natural disaster.

The article above is for informational purposes as Guaranteerate does not offer the FHA 203(h) loan product.

Phil Ganz (354 Posts)

Philip D. Ganz is a Boston Mortgage Broker and Boston Home Loan specialist. For information, expertise, consulting, or advice about home loans, refinancing mortgages, or commercial property loans, contact Phil with no obligation: 617-529-9317


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