When disaster strikes your home and community, it’s devastating. It’s not just about losing a sense of security and day-to-day shelter, but determining how to move forward when everything is in disarray. The road ahead isn’t easy, but for homeowners in federally declared disaster areas, there is a form of assistance: the FHA 203h loan.

Created by the federal government, this loan “helps victims in Presidentially-designated disaster areas recover by making it easier for them to get mortgages and become homeowners or re-establish themselves as homeowners,” primarily by its lack of a down payment requirement.

In addition to not requiring a down payment, a 203h loan can be used for both purchases and refinances or to build, or in some cases rebuild, a home. There are no income limits on the borrower and the new home does not need to be in the same location, or even the same disaster area, though it will need to be in a federally declared disaster area. 

This list of frequently asked questions may help determine if the 203h loan is right for you.

What kind of disasters are included? How do I know if I qualify?

  • The first question you’ll need to answer is whether you own or rent a home located in a designated federally declared disaster area (the FEMA website will have information on specific areas). According to FEMA, a disaster could include “any natural event, including any hurricane, tornado, storm, high water, wind-driven water, tidal wave, tsunami, earthquake, volcanic eruption, landslide, mudslide, snowstorm, or drought, or, regardless of cause, fire, flood, or explosion, that the President determines has caused damage of such severity that it is beyond the combined capabilities of state and local governments to respond.”
  • You’ll need to prove that your home was destroyed or damaged to such an extent that reconstruction or replacement is necessary.
  • The home must be a primary residence, lived in during the time of disaster.
  • You’ll need a minimum FICO score of 500 to qualify.

Can I apply for a 203h loan if I am not a first-time homebuyer?

If you meet the criteria above, the FHA 203h loan is available to both first-time and repeat homebuyers.

What is the time window to apply for a 203h loan?

  • You’ll need to apply for the loan within one year of the disaster declaration (the specific declaration date is available on the FEMA website).

Who should I contact, and when?

  • First, contact the Federal Emergency Management Agency (FEMA) to register with the agency. You can do this online, in person at a disaster recovery center or by calling 800-621-3362.
  • Next, call your homeowners insurance company, and any insurance company where you have a disaster policy, such as flood or earthquake, if applicable.
  • If you’re currently paying a mortgage, call the mortgage service where you make monthly payments. Depending on your lender, you may be eligible for forbearance on mortgage payments.

If you determine you want to apply for a 203h loan, connect with us. We’ll discuss your options and help find the right loan for you.

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