FHA Property Improvement Mortgage Loan Program

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HUD insures lenders against most losses on loans for home improvement, under the Title I program.

To make it easier for consumers to obtain affordable loans for home improvement, the Federal Housing Administration (FHA) insures loans made by private lenders to improve properties that meet certain requirements. "Lending institutions make loans from their own funds to eligible borrowers to finance these improvements."

The Title I program insures loans to finance the construction of nonresidential buildings on the property, as well as the moderate or light rehabilitation of properties. This program may be used to insure such loans for up to twenty years on either multi-family or single family properties. The maximum loan amount is $25,000 for improving a single-family home or for building or improving a nonresidential structure.

The maximum loan amount for improving a multifamily structure is $12,000 per family unit, not to exceed a total of $60,000 for the structure. These are fixed-rate loans, for which lenders charge interest at market rates. The interest rates are not subsidized by HUD, although some communities participate in local housing rehabilitation programs that provide reduced-rate property improvement loans through Title I lenders.

FHA insures private lenders against the risk of default for up to ninety percent of any single loan. The annual premium for this insurance is one dollar per one-hundred dollars of the amount advanced; although this fee may be charged to the borrower separately, it is sometimes covered by a higher interest charge.

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