The FHA Section 203(h) program allows The Federal Housing Administration (FHA) to provide home financing to victims of a major disaster who have had their homes substantially damaged or flooded. The recent Hurricanes like Milton, Helene and Debbie have devastated many parts of Florida, Georgia, North Carolina and Tennessee. The FHA 203h loans are designed to help homeowners put back together the pieces and rebuild after horrific wind, flood or fire damage.
FHA 203h Purpose:
- The FHA section 203(h) program allows FHA to insure mortgages through approved lenders and banks to victims of a major disaster like Hurricanes, fire, or floods who had their homes substantially damaged.
- This program 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.
- The borrower’s application must be submitted to the lender within one (1) year of the President’s declaration of the disaster.
- Any eligible home (regardless of property state) that has been destroyed in a presidentially declared disaster area is eligible to apply for mortgage insurance under this program, whether they owned the home or were renting it. Again, this program is not limited to just Hurricane victim’s, any eligible disaster area can qualify.
- This program is being offered for both purchase and refinance transactions.
- Renters who are displaced by a disaster may be eligible to purchase a new home with 100% financing through this program, and exempt from the 3.5% down payment requirement that comes with the standard FHA mortgage.
FHA 203(h) Benefits:
- Eligible borrowers may receive financing up to 100% of the sales price.
- 15 and 30-year fixed terms available (no adjustable rate terms)
- The closing cost can be paid by the borrower, home seller or lender via premium pricing.
- Section 203(h) loans require mortgage insurance premiums (MIP) the same as regular FHA loans. This is to be paid as upfront, or most commonly, added to the borrower’s loan amount.
FHA 203(h) Loan Eligibility:
FHA 203(h) Loan Eligibility:- 620 minimum FICO score, lender in house “overlays” may also apply. Read more about FHA Loan Details. The credit requirements for this program are more relaxed when compared to standard FHA loans. Derogatory credit (missed payments, etc) as a result of the disaster and missed work is often overlooked.
- Your previous residence must have been located in a Federally declared disaster location and be damaged to such an extent that rebuilding or replacing is necessary. Remember, borrowers have up to one year from the date the disaster area was declared to apply. Be sure you can document residency, and also save any insurance claim forms, FEMA documentation, photos, and other important information if possible.
- 203h loans are for principal owner residences only. There is an occupancy requirement for this program – investment homes are not permitted. The new home being purchased is NOT required to be in the same location. Example: your home in Tampa Florida was destroyed and you want to relocate to Jacksonville – this is acceptable.
Eligible FHA 203h Properties Types:
- Principal Residences – Single-Family Homes, PUD
- One-unit detached homes
- FHA-approved established condominium projects
Ineligible FHA 203h Property Types:
- Investment Properties
- Second Homes
- Attached Properties
- 2,3,4 Units
- Co-Ops, Condotels, Timeshare
- Mobile and Manufactured homes are not eligible
FHA 203h Loan Limits:
Borrowers can look up their 2025 FHA loan limits at the HUD website. The 2025 FHA loan limits will be increasing slightly, borrowers can expect the new loan caps to be posted in late November.
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