HUD Extends Offers to Katrina, Rita Victims

With millions of Gulf Coast residents displaced or absorbing significant damage from the deadly storms that struck the region last month, the Department of Housing and Urban Development (HUD) announced a new financing program designed to get current and prospective home owners back on their feet.

People whose properties were destroyed or suffered damage due to Hurricanes Rita or Katrina will be eligible for a loan program that involves no down payment and provides them the opportunity to live anywhere in the U.S. they choose.

Under the special mortgage program, called Section 203(h), HUD will provide insurance for mortgages obtained by individuals in the federally-declared Gulf Coast disaster areas whose homes were either A) destroyed or B) damaged to the extent that extensive reconstruction and/or replacement are needed. While victims can take advantage of this program anywhere, the size of the mortgage is limited to $312,895, depending on the area’s average sale price.

Borrowers must still qualify for Federal Housing Administration (FHA) loans before gaining eligibility. Fortunately, FHA mortgages are generally easier to qualify for than those on the private market, and applicants will not have to spend any money up front to close the deal. Plus, insurance premiums can be financed into the overall FHA mortgage amount, keeping closing costs minimal.