What to Know if Your Home Is Damaged or Destroyed in a Disaster
If you have an FHA home loan and your property is damaged or destroyed by a wildfire, flood, hurricane, mudslide, or other natural disaster, there are three important things to know about the recovery process.
The first is that you should contact your participating FHA lender immediately to discuss your options for loan forbearance, modification, or other options that are necessary while you recover. The second is never to rush into an insurance settlement. But the third is the most important of all.
The third factor to be aware of is that there may be two levels of assistance offered to you depending on how extensive the disaster was.
In cases where there is no federal declaration of a disaster area, you may be entitled to help with your FHA loan by your participating lender, and you may qualify for state or local assistance in the recovery process.
But only when the site has been declared a federal disaster area will you become entitled to certain FHA protections and options, which include a 90-day moratorium on all foreclosures related to FHA loans in the disaster area, as well as rehab loan options:
- The HUD Section 203(h) program offers FHA loans to renovate or replace damaged homes in federal disaster areas.
- HUD's Section 203(k) loan program also allows you to use an FHA loan to purchase or refinance a house and its repair.
- FHA energy-efficient mortgage options are also available.
It’s important to remain in contact with the lender and plan your recovery accordingly. Don’t assume you don’t have to make mortgage payments even if your home is uninhabitable.
You will need the lender’s cooperation to change the repayment schedule on your home loan. If you struggle financially after a natural disaster, work with your loan servicer to arrange a modified payment schedule or other options to save your home.
If you are unsure whether your zip code is included on the list of federally-declared disaster areas, check with the Federal Emergency Management Agency (FEMA) for information on declared disasters.
If you don’t see your area on the list, you may need to check back. Sometimes it can take time for the declarations to be made and for relief to begin.
Keep Your Eyes on Your Loan Balance
Learn About FHA Loan Prepayments
Taking Out a Home Loan Makes You a Borrower
Do you know what's on your credit report?
Learn what your score means.