You might be able to get loans to repair homes, make upgrades, and improve your property. Lenders have special house repair loans that the government insures against default. Low income home improvement loans generally have low-interest rates, and some programs provide funds as a grant if you qualify.
You can apply for a HUD home improvement loan if you cannot get a loan through another source due to your finances. However, you can apply for other renovation loans if your income is too high to qualify or your home is not in an eligible area. Each loan has unique requirements.
The Section 504 Home Repair program can pay for repairs, improvements, and modernization of your single-family home. The program also goes by the Rural Housing Repair Loans and Grants program since funds are only for homes in eligible areas. The U.S. Department of Agriculture (USDA) has a map showing if your home is in a designated rural area.
To qualify for rural home improvement loans, you must be the occupying homeowner and be unable to obtain financing elsewhere. You could receive program funds in the following ways:
· Grants – You may qualify if you are elderly, have a very low income, and need to remove health or safety hazards. The USDA considers 62 years of age and older as elderly.
· Loans – You may qualify if you have a very low income. The income limit varies by county and number of family members. By means of example, the income limit for a four-person household in Los Angeles, CA is $59,000, while it is $31,800 in Decatur, Alabama.
The maximum grant amount is $10,000. The government can demand repayment if you sell the home within three years of receiving the grant. You can only receive grant funding up to $10,000 in your lifetime.
The maximum loan amount is $40,000 at 1% interest for up to 20 years. You will need a real estate mortgage and full title services if your loan is for more than $25,000. You can receive both a grant and loan for a maximum combined amount of $50,000.
The 203(k) Rehabilitation Mortgage Insurance Program can help you pay for new home purchases or refinance existing mortgages as well as cover costs for improvements, repairs, and upgrades. This is a single loan that allows you to buy a new home and renovate it or refinance your existing loan and fund home projects.
Your home must be at least one year old, and the loan must be for at least $5,000. Here are some of the improvement types the loan can cover:
· Altering the structure
· Modernizing functionality
· Remove health hazards
· Improving disability access
· Enhancing energy conservation
FHA Property Improvement Loan Insurance can help you pay for light to moderate improvements on residential, nonresidential, and commercial properties. The insurance also covers loans for the construction of nonresidential buildings.
The FHA insurance reduces the risk to private lenders, so they can more readily provide funding to borrowers. The insurance protects lenders from defaults up to 90% of the loan. Here are the maximum loan amounts by structure:
· $25,000 for a single-family house or nonresidential structure
· $12,000 per unit for multi-family homes, up to $60,000
You may need to pay 1% of the loan amount as an annual premium. However, lenders may charge a higher interest rate that includes this premium amount.
You can apply for a Fannie Mae HomeStyle Renovation Mortgage or Freddie Mac Construction Conversion and Renovation Mortgage to buy a home and cover the cost of different projects, from repairs to luxury upgrades. You’ll need to work with an approved contractor to submit plans and costs for your home renovation to the lender.
These Fannie Mae and Freddie Mac loans do not have income limits, and your credit score can be as low as 660. If you are a first-time homebuyer, you may need to participate in an education program to qualify.
Whether you rent or own, utility and energy bills are monthly expenses and can become out of budget during the extreme weather months. An outdated or broken appliance can add to the monthly costs and be even more expensive to replace or repair.
This next government program might reduce your energy expenses and help you cover rising heating and cooling costs.