Property Improvement Loan Insurance

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The Federal Housing Administration (FHA) works primarily to ease difficulties for consumers in getting home improvement by providing housing loans from the department of Housing & Urban Development. Under its category of Housing Loans, it grants government loans to homeowners to improve/refurbish their properties. Simultaneously, it insures these housing loans granted by private lenders under the terminology Property Improvement Loan Insurance, which is part of Government Loans. As several properties come up for repair and refurbishing year after year, this becomes one of HUD’s loan insurance products that is used very frequently.

The Title I of this Government Loans program insures loans granted to finance the light or moderate repair of properties, as well as the construction of non residential buildings on the property, such as a piece of land that needs proper digging, leveling and laying of sewage and water pipelines. This program insures loans for up to a maximum of 20 years on either single or multifamily properties. The maximum loan amount for improving a single family home or for improving or building a non residential structure on a piece of land is $25,000.

For repairing or refurbishing a multi-family structure, which is a structure containing more than four dwelling units, the maximum loan amount disbursed is $12,000 per family unit, and also not to exceed an aggregate of $60,000 for the structure. Private lenders charge interest at market rates but at fixed rates. These interest rates are not subsidized.

HUD has a list of lenders specially approved by them and only those in this list can issue loans covered by Title I insurance specifically for this program. It is a fact that under strict government loans regulations, most lenders and contractors use this Title I insurance program. HUD encourages the homeowners to work in tandem with their lender in selecting a home repair contractor in order to avoid inflated estimates.

Title I loans is disbursed directly to the borrower or, if the loan is taken through a dealer, the disbursement will be made jointly to the dealer and the borrower.

Eligible borrowers include the owner of the property to be repaired, refurbished or improved, plus the individual leasing the property (provided that the lease will extend at least 6 months beyond the date when the loan must be repaid), or someone who is buying the property under a land installment contract.

Eligible Activities:
Title I loans must be used to finance permanent improvement of property that protect or improve the basic living conditions or the utility of the property–including ready-made homes, single-family and multifamily homes, nonresidential structures, and the preservation of historic homes. The housing loans can also be used to cover fire safety equipment.

Application:
All applications must be submitted to a Title I approved lender. The government web site offers a searchable list of approved lenders.