As communities across multiple states start to rebuild in the aftermath of the devastation caused by hurricanes Harvey and Irma, we want to highlight a mortgage program that can help disaster victims rebuild their homes as well as their lives.

The FHA 203(h) Home Loan Program enables borrowers that live in Presidentially-designated disaster areas and whose homes were destroyed or seriously damaged to purchase a home with no down payment as compared to the 3.5% down payment required for a standard FHA loan and the 5% - 20% down payment typically required by most conventional mortgage programs.  The ability to get a mortgage with no down payment can help financially-strapped individuals rebuild and recover more quickly following a natural disaster.

Similar to the standard FHA Mortgage Program, other benefits of the FHA 203(h) Program include lower FHA mortgage rates and more flexible borrower qualification requirements, including a lower minimum credit score.  Additionally, the FHA 203(h) Home Loan Program does not require borrower reserves which further reduces the financial commitment required to get a mortgage.

Another unique advantage of the the FHA 203(h) Mortgage Program is that the loan can be used to both buy or reconstruct a single family home.  The ability to use an FHA 203(h) loan for the reconstruction of a home is especially valuable in communities that are recovering from a disaster.  Another positive is that the program applies to both home purchase loans and refinances.  In short, the FHA 203(h) Program makes getting a mortgage to buy or rebuild a home more affordable for natural disaster victims.

Among the considerations for the FHA 203(h) Program, borrowers are required to pay an upfront and ongoing FHA mortgage insurance premium (MIP). The ability to buy a home with no money down as well as lower FHA mortgage rates help offset these extra costs.  The FHA also imposes loan limits that cap the size of mortgage you can obtain through the 203(h) Program.  Borrowers that live in more expensive areas may find the loan limits to be overly restrictive as they look to buy a new home or rebuild.

Because time is crucial for disaster victims seeking to re-establish their homes and lives, HUD has implemented procedures to accelerate the mortgage process for FHA 203(h) loans.  For example, lenders are allowed to review an application without sending additional documents to the FHA.  This makes the mortgage process more efficient so that borrowers can close their loans faster and get back on their feet more quickly.

You can apply for the FHA 203(h) Mortgage Program through FHA-approved lenders such as banks, mortgage banks, mortgage brokers and credit unions.  We want to emphasize that only FHA-approved lenders are allowed to offer the FHA 203(h) Program.  Borrowers should confirm that their lender is approved by the FHA before submitting an application for the program.  Please note that borrowers are required to submit their mortgage application for the FHA 203(h) Program within one year of the President designating a county a disaster area.

FREEandCLEAR offers a comprehensive overview of the FHA 203(h) Program.  For more mortgage tools and resources please visit FREEandCLEAR.com.