FHA Title I Loan Basics
The FHA's Title I loan program insures loans to finance rehabilitation of properties, as well as the construction of nonresidential buildings on the property. It is intended for "light or moderate" repairs/rehab.
Title I loans feature terms up to 20 years on either single- or multifamily properties. The maximum loan amount is "$25,000 for improving a single-family home or for improving or building a nonresidential structure" according to the FHA official site.
For multi-family unit properties, there is also an FHA Title I loan that has a maximum of $12,000 per family unit, "not to exceed a total of $60,000 for the structure."
FHA Title I loans are fixed-rate loans (they don't come with variable rate options) and have typical market rates for the interest--interest rates for Title I loans are not subsidized by the FHA or HUD, but "some communities participate in local housing rehabilitation programs that provide reduced-rate property improvement loans through Title I lenders" according to the FHA.
Only FHA/HUD approved lenders can offer a Title I loan. To be eligible to apply for a Title I loan, borrowers must be either "the owner of the property to be improved, the person leasing the property (provided that the lease will extend at least 6 months beyond the date when the loan must be repaid), or someone purchasing the property under a land installment contract".
There is a list of approved uses for Title I loans. The FHA rules permit loan proceeds to be used for "permanent property improvements," and for renovations that "improve the basic livability or utility of the property-including manufactured homes, single-family and multifamily homes, nonresidential structures, and the preservation of historic homes."
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