FHA 203(h) Disaster Loan
In light of the recent devastation in Texas, and to Florida, Nations Lending will open up the 203(h) program to the affected borrowers. This program offers 0% down in the purchase or reconstruction of a new home to victims of a Presidentially-Declared Major Disaster Area (PDMDA)! Below are the specific requirements that will be needed using this program.
– The case number must be assigned within 1 year of the PDMDA
– The mortgaged property must be the borrower’s principal residence
– The previous residence must have been located in a PDMDA and destroyed or damaged to an extent that replacement is necessary
– The newly purchased property must be a single family residence or an FHA approved condo.
– Manufactured homes and multi-unit properties are NOT eligible
– Every effort should be made to obtain traditional document for employment, assets, and credit – these attempts MUST be documented if alternative documentation is being used
– The Mortgagee MUST Document and verify that the Borrower’s previous residence was in the disaster area, and was destroyed or damaged to such an extent that reconstruction or replacement is necessary.
– Documentation attesting to the damage of the previous house MUST accompany the mortgage application. Attestation from the borrower alone will NOT be sufficient
– If purchasing a new house, the house need not be located in the area where the previous house was located.
– 100% LTV allowed, case number MUST be ordered as a 203(h)
– Loans underwritten in house will be PURCHASE ONLY
– 580Minimum score required (Risk will review scores under 580 on a case by case basis)
– If derogatory credit is present, we may consider the borrower to a satisfactory credit risk if the credit report indicates satisfactory credit prior to the disaster
– Short term employment may be used for calculation of effective income if obtained following the disaster
– Bonus and Overtime income may not be eligible if traditional income documentation cannot be obtained
– For the purchase program, the mortgage payment on the destroyed residence may be excluded IF:
o Verification that the borrower is working with the servicing mortgagee to appropriately address the mortgage obligation; AND
o Verification is provided that any property insurance proceeds were applied to the mortgage of the damaged home
o If these two items are not sufficiently verified, the mortgage payment will need to be included in the ratios
– Late payments on a previous obligation on a property that was destroyed may be disregarded, where the late payments were a result of the disaster AND the borrower was not three or more months delinquent on the mortgage at the time of the disaster
– Loans will be underwritten by select underwriters in the affected regions
For more information, please contact: