| Few people realize that they have access to a | | | | been completed. The mortgage is endorsed by HUD |
| potentially large number of different grants and loan | | | | to reduce risk to the lender. |
| schemes that can give them the funds they need to | | | | Is your Home Eligible? |
| repair their home, or even to allow them to afford to | | | | An eligible property must meet the following criteria: |
| purchase a home. There is a very large number of | | | | A 1-4 family dwelling |
| such schemes available to US residents, many of | | | | A property must require at least $5,000 worth of |
| which are backed by federal agencies such as the | | | | repairs (cosmetic repairs such as repainting by |
| Department of Housing and Urban Development | | | | themselves are not acceptable, but can be included in |
| (HUD). | | | | the total) |
| Home Repair Grants | | | | Construction has been complete for at least one |
| Home repair grants can be obtained in a number of | | | | year |
| different places, and are surprisingly easy to apply | | | | Property must conform to all local zoning |
| for-at for example, anyone can sign up and search a | | | | requirements |
| database of federal grants that they can apply for | | | | Homes that have been or will be demolished as part |
| providing they meet the required criteria. The web | | | | of the rehabilitation plan are eligible as long as at least |
| site of the Catalog of Federal Domestic Assistance ( | | | | part of the existing foundations will remain. |
| also provides an extensive list of different types of | | | | Condominiums may qualify as long as the condo is |
| housing grants and loan schemes for a wide variety | | | | owner-occupied, rehabilitation is limited to the interior, |
| of different purposes, and for different groups of | | | | and the maximum amount borrowed does not |
| people. Each has different eligibility criteria-some, for | | | | exceed 100% of the value after rehabilitation. |
| example, are open only to senior citizens, while | | | | Refinancing a home you currently own with the |
| others are open only to residents of rural areas, and | | | | intention of rehabilitating is also permitted. |
| still others are open to anyone who occupies the | | | | There are also some rules as to how long |
| property they wish to apply for a grant for. Most | | | | rehabilitation may take. First, work on the property |
| people, therefore, will generally qualify for at least | | | | must begin within 30 days of the agreement being |
| one type of home repair or other housing grant. | | | | executed. Second, work on the property must not |
| The HUD Section 203(k) Mortgage Plan | | | | be stopped for more than 30 consecutive days. |
| The US Federal Housing Association (FHA) currently | | | | Third, the work must be completed in full within a |
| administers several HUD home repair and rehabilitation | | | | specified time period (typically six months). |
| schemes. These schemes are designed to help | | | | What Improvements are Eligible for Financing? |
| people and communities rehabilitate their homes, and | | | | In general, any luxury improvements are not eligible |
| are also intended as a way of increasing opportunities | | | | for financing. Any improvements that are not part of |
| for home ownership. | | | | the property are also prohibited. However, the |
| The most extensive HUD rehabilitation program is | | | | money can be used to finance room additions, |
| known as Section 203(k), and is designed to provide | | | | building decks and similar structures. In addition, all |
| families with a means of obtaining permanent | | | | applicable improvements must meet certain energy |
| financing for homes that require extensive | | | | conservation standards. |
| rehabilitation. Lenders do not normally finance such | | | | Energy-Efficient Mortgages |
| homes, as the condition and value of such properties | | | | HUD also backs an energy-efficient mortgage |
| rarely matches up to the amount borrowed. In these | | | | program that helps home buyers or owners purchase |
| situations, the borrower must get an interim loan, | | | | an energy-efficient home, or refinance and remodel |
| usually at a higher interest rate, to purchase the | | | | their existing home to become more energy-efficient. |
| house, and then a second loan for money to do | | | | Almost anyone is eligible to apply for such a |
| construction and rehabilitation work. Only when the | | | | mortgage, providing they meet certain income |
| house is complete can the borrower apply for a | | | | requirements and can prove their ability to pay the |
| mortgage to pay off the existing loans. | | | | loan. The improvements made must also meet |
| Section 203(k) allows borrowers to get a mortgage | | | | eligibility criteria-the total cost of the improvements |
| that covers the costs of the purchase and the | | | | must be less than the value of the energy that the |
| rehabilitation of a property at the time of | | | | applicant will save by adding energy-efficient |
| purchase-before the rehabilitation work has even | | | | improvements to their home. There is also a limit on |
| begun. Funds are provided both to purchase the | | | | the amount of money that can be borrowed for |
| property and for rehabilitation, based on the | | | | energy-efficient improvements. This is the greater of |
| projected value of the home after the work has | | | | $4,000 or 5% of the current value of the property. |