Buying a Home in a Hurricane

When Disaster Strikes, Know Your Options


Unfortunately, Hurricane Harvey has given us a reason to bring up a tough topic.  Disasters are a sad reality of life, and the potential for them is everywhere, whether it be the result of a hurricane, earthquake, tornado, flood, volcano, or something man made.  When disaster strikes, one of the most important things to consider once in a place of safety is what to do for shelter? For those buying a home, is the home under contract still there and in livable condition?  For those with a home destroyed by disaster, where to go?


The 203(h) loan can help you rebuild after disaster strikes

First, a note on perspective.  When disaster strikes, people are losing their homes, and sometimes, their lives.  Your lender absolutely, positively knows how important your real estate transaction is, but when something as devastating as a natural disaster takes place, you need to expect delays, as appraisal re-inspections are often required (always in Presidential declared disaster areas), and sometimes needed repairs must be made before you can close on your new home.  While delays and hold ups aren’t ideal, you’re a lucky one if that’s the only problem to come out of a disaster while you’re buying a home.


The Disaster Relief Mortgage


For those unfortunate ones who have been displaced and had their homes destroyed by a natural disaster, there’s the FHA 203(h) mortgage.  The FHA 203(h) mortgage loan allows those with homes located in an area designated by the President as a disaster area that were destroyed or damaged to finance the purchase or reconstruction of a primary residence.

The biggest perk of the 203(h) program is that it allows a homeowner or renter who lost their home to buy a new one with 0% down payment.  The program also allows up to 6% sellers assistance (closing cost help), so there is no savings or reserve requirement to obtain a loan for a new home.

The 203(h) can be used to borrow up to the local HUD loan limit for FHA loans, and with restrictions, any mortgage obligation on a previously occupied home in the disaster area can be excluded from qualifying, so the 203(h) can be a way for someone affected by disaster to get a truly fresh start.


Not every Loan Officer is well versed in the 203(h) loan, and not every lender offers it, but if you have any questions on the program, you can reach out to your Mason Mac loan officer or give us a call and we’ll be happy to answer any and all questions about  the program.


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