The Department of Housing and Urban Development on Wednesday announced a new mortgage financing program that requires no down payment for people whose homes have been destroyed or damaged due to Hurricanes Katrina or Rita. In addition to requiring no down payment, potential homeowners can live anywhere they choose in the United States.
Under the special mortgage program, called Section 203(h), HUD, through the Federal Housing Administration, will insure mortgages for individuals or families in a Presidentially declared disaster area whose residences were destroyed or damaged to such an extent that reconstruction or replacement is necessary.
“HUD is committed to helping people affected by these terrible disasters to re-establish their lives,” said Housing and Urban Development Secretary Alphonso Jackson. “We want to give these families and individuals an opportunity to start over – as homeowners – whether they owned or rented their previous residences.”
Borrowers must be able to qualify for FHA mortgages, which are generally easier to qualify for than those on the private market, but they will not have to put any cash down to purchase the property. In addition, the FHA mortgage insurance premiums can be financed into the mortgage amount, so only minimal closing costs would be required.
An added benefit of the 203(h) mortgages, which are offered by any FHA-approved lender, is that they can be used anywhere in the United States. For example, Katrina victims from Louisiana can choose to move wherever they wish. The limits on the size of the mortgage amount is up to $312,895, depending on the average sales prices in the area.
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