January 18, 2011
There are many options available to FHA borrowers to make improvements on the property they bought with an FHA guaranteed loan. One option is the Title I program, which allows property owners to make “non luxury” improvements to a home, which may include construction of new structures in some cases.
As with all other FHA loans and HUD programs, the FHA does not lend the money. It insures Title I loans the same way it does with FHA home loans; the borrower and a participating lender work together on the application and terms. Title I loans are for borrowers with single-family homes, multi-family properties, and manufactured homes.
A Title I loan can be used together with an FHA 203(k) rehabilitation mortgage. For single family homes, Title I money can be used for “alterations, repairs and for site improvements” according to HUD. For multi-family units, Title I funds can only be used for building alteration and repairs.
For manufactured homes, there are two maximum loan amounts; one for “personal property” mobile homes which is limited to $7,500, and one for mobile homes classified as real estate, which features a maximum of $25,090. To be classified as “real property” there are a number of requirements which include having the home affixed to a permanent foundation.
Single family homes are eligible for up to $25,000 and multi-family units can qualify for an average of about $12,000 per unit, up to a limit of $60,0000
The length of Title I loans varies depending on the housing type. The maximum loan term of 20 years applies to both single and multi-family homes. Mobile homes classified as personal property have a 12 year loan term while those classified as real estate offer 15 year loan terms.
Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.
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