FHA 203h – 100 Percent Financing Home Loans

One of the unique characteristics of FHA 203h home loans that make the loan program one of the most sought-after mortgages for disaster-affected homeowners is the 100 percent financing feature. With the recent events of natural disasters, in particular with the incidences of hurricane Harvey and other such natural disasters in the U.S and across the globe, it has become imperative for affected homeowners to look for disaster relief loans.

As one of the key features of FHA disaster loans, below is a brief overview of 100 percent financing loans as well as the pros and cons of such loans.

What does 100 percent financing mean?

Full one hundred percent financing loans are home loans that do not require the borrowers to make a down payment. With the usual down payment on a house ranging between three and a half and ten percent of the actual price of the home, 100 percent financing offers an affordable option to prospective homeowners. This is especially useful for those affected by natural disasters. For instance, if you are looking to get a mortgage for a house that costs two hundred thousand dollars, you will be required to make a down payment ranging from seven thousand to twenty thousand dollars.

However, a home loan such as 203h loans for disaster victims, which come with 100 percent financing means that you do not have to make any down payment as part of the requirements for taking the loan. However, it is worth noting that getting a 100% financing loan does not take away the fact that you are still required to pay for the closing costs and prepaid items associated with the loan. Therefore, while you are not obliged to make a down payment, it is obligatory to pay for the closing costs and prepaid items at the closing table.

Getting 100% financing is not as complicated as most people think, especially if the internet is put to good use. 100 percent financing loans are particularly ideal for victims of natural disasters who are trying to get their lives back on track. These loans provide you with an affordable opportunity to rebuild or renovate your damaged home or even buy a new one.

It is worth noting that there are not too many loans with 100% financing. The Veterans Affairs home loans or often called VA loan is the only other option. The only way to qualify for a VA loan is by serving in the armed forces. Those who don’t meet this requirement cannot get a hundred percent financing elsewhere.

The Pros and Cons of a No Down Payment Home Loan

A hundred percent financing or no down payment home loans as they are also called are designed for people that cannot afford the usual five to ten percent down payment on a mortgage but need a home as soon as possible. This explains why the feature is a major characteristic of hurricane rehab loan and other such relief loans for disaster victims.

One of the many benefits of getting loans with this function is that it allows borrowers to purchase the home of their choice quickly. Such loans do not only save borrowers some money, but it also saves them the time of preparing money for the down payments.

 

Are there any drawbacks?

There are two sides to a coin, and just as 100% financing home loans have their benefits, the loan packages also come with some disadvantages. One of such drawbacks is that the FHA 203h home loan is only offered to those affected by a natural disaster like the recent Hurricane Harvey. The home that the applicant used to live in must be located in a Presidentially declared disaster area. The house must be damaged or destroyed to such an extent that reconstruction or replacement is necessary.

Natural disasters are inevitable. However, taking the right step after the occurrence of a catastrophe goes a long way to enhance the recovery process.