Home Loan Options to Restore Your Home from a Catastrophe

There is no telling when a natural disaster such as an earthquake or a manual catastrophe such as war can occur. But whenever it occurs, chances are high that your home might get damaged on a large scale. In such a situation, it may be so that your promising insurance policy also might not offer the desired level of financial assistance. So, what will you do in such a case? As an obvious measure, you will take loans from reputed lenders such as SBA and Network Capital Funding Corp for getting the desired restoring aid. But do you know that there are more options that can help you during these tough times? These are two useful government programs that can fund home repair needs.

203(k) Loan

This FHA loan program is meant for people who wish to repair their damaged homes that are their primary dwellings but do not enough money to do so. It is used for dealing with the damaged foreclosures and repairing expenses triggered by natural disasters. The loan amount can meet your existing mortgage expenses along with the material and labor costs needed to make repairs. However, the maximum amount cannot exceed the total repairing worth of your property as determined by a professional evaluator. In case the damaged home is such that it is not fit for staying until some repairs are done, this loan program facilitates you to borrow mortgage payments worth of six months. As a result, you can easily arrange for living somewhere else.

In order to qualify, your home should be a single- to four-family home or an FHA-approved condo that was constructed a year ago, at least. The loan amount is not meant for barbecue pits, swimming pools, and other luxury items as regarded by the FHA. With the loan money, you can build a renovated version of your previous home, but it does not need to be present in a presidentially declared disaster region. This means that this program is less restrictive as compared to other government loan programs. However, the repairs must be done as per the HUD’s Minimum Property Standards (safety and energy efficiency standards) and the region’s ordinances.

For obtaining this loan, you need to seek an FHA-approved lender or a specialist because processing of these loans is a bit complex. However, you will have to pay up-front as well as monthly mortgage insurance premiums, of which only the former one can be financed.

Home Loan Options to Restore Your Home from a Catastrophe

203(h) Loan

This loan program is ideal if you have lost your beloved property and now wish to buy a new one or repair the current one. Recognized as an FHA-insured mortgage loan, it can help in restoring the completely damaged or severely destroyed homes or buying a new home. However, there is an eligibility criterion for you to qualify – the home should be destroyed to the point of requiring renovation or replacement as well as should be situated in a presidentially designated calamity area. As a rule, you need to apply for the loan to an FHA-approved lender within one year of the calamity declaration.

Such loans, subject to the FHA’s limits of your area, are available for single-family chief homes although they are not meant for 100% financing. In case you need that loan for purchasing a new one, you can obtain up to 6% of the buying cost from the seller to meet the prepaid outlays such as taxes and closing costs. The only limitation is that you will end up paying the upfront as well as monthly mortgage insurance premiums just like the 203 (k) loan. Of the two, only the upfront premium is funded.

Author Bio: Mary Carnegie works as a senior broker in a leading mortgage firm, in the United States. At present, she is successfully working to be a part of an established finance company, Network Capital Funding Corp. You can reach her at @maryjcarnegie or twitter.com/maryjcarnegie.

Share on:


TradingView is the top stock charting software available for FREE.

Get Now


Top Stock Broker in India. Open Free Demat and Trading Account.

Get Now
Scroll to Top