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Mortgage insurance for victims of disasters Section 203 (h)


The Section 203 (h) program allows the Federal Housing Administration (FHA) to insure mortgages made by qualified lenders to victims of a major disaster who have lost their homes and are in the process of rebuilding or buy another house.



Through Section 203 (h), the Federal Government assists victims in the disaster areas designated by the President to recover by making it easier for them to obtain mortgages and become owners or reestablish themselves as owners.


Type of assistance:

This program offers mortgage insurance to protect lenders against the risk of default on mortgage payments to victims of qualified disasters. Individuals are eligible for this program if their homes are located in an area designated by the President as a disaster area and if their homes were destroyed or damaged to such an extent that reconstruction or replacement is necessary. Insured mortgages can be used to finance the purchase or reconstruction of a single-family home that will be the principal residence of the owner. Like the FHA basic mortgage insurance program, it resembles (Section 203 (b) of Mortgage Insurance for one to four families), Section 203 (h) offers features that facilitate disaster recovery for homeowners:


No down payment is required. The borrower is eligible for 100 percent financing. Closing costs and prepaid expenses must be paid by the borrower in cash or paid through premium prices or by the seller, subject to a limitation of 6 percent of the seller's concessions.


FHA mortgage insurance is not free. The mortgages obtain from the borrowers an insurance premium in advance (which can be financed) at the time of purchase, as well as the monthly premiums that are not financed, but are added to the regular payment of the mortgage.


HUD sets limits on the amount that can be insured. To ensure that its programs serve people of low and moderate income, the FHA sets limits on the dollar value of the mortgage. The current limit of the FHA mortgage can be viewed online. These figures vary according to time and place, according to the cost of living and other factors (there are also higher limits for two or four family properties).


Eligible participants:

Credit institutions approved by the FHA, such as banks, mortgage companies, and savings and loan associations, are eligible for Section 203 (h) insurance.


Eligible customers:

Any person whose house has been destroyed or seriously damaged in a disaster area declared by the President is eligible to apply for mortgage insurance under this program.



The borrower's request for mortgage insurance must be submitted to the lender within one year of the declaration of the President of the disaster. Applications are made through a credit institution approved by the FHA, which makes its requests through a provision known as "Direct Endorsement", which authorizes them to consider applications without submitting documentation to HUD. The processing and administration of mortgage insurance for this and other FHA family mortgage insurance products are handled through the HUD Home Ownership Centers.