FHA Title 1 Loans: What You Need to Know

You don't need equity in your home to get one of these loans for improvements or repairs, but there are maximum loan amounts.
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FHA Title 1 Loans: What You Need to Know

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FHA Title 1 loans are a little-known financing tool for home improvements and repairs. The FHA is well-known for helping first-timers buy a home, and Title 1 loans are a way for homeowners to finance permanent property improvements and renovations.

Home buyers can also piggyback a Title 1 loan onto their purchase mortgage to fix up a property they’re buying.

What is an FHA Title 1 loan?

An FHA Title 1 loan is a fixed-rate loan used for home improvements, repairs and rehab. (Adjustable-rate loans aren't offered.) Loans under $7,500 are usually unsecured; your signature will suffice. Larger loan amounts will require using your home as collateral. You get the loan from an FHA-approved lender.

HUD says the money can be used for anything that makes your home 'basically more livable and useful.' That includes buying appliances.

The definition of FHA Title 1 loan “improvements” is fairly broad: The Department of Housing and Urban Development says the money can be used for anything that makes your home "basically more livable and useful.”

That includes buying appliances, such as dishwashers, built-in ovens, refrigerators and freezers. Home improvements that aim to expand accessibility for disabled people are also allowed, as are energy-efficient upgrades such as solar energy systems.

FHA Title 1 loan details:

  • The maximum loan term — the length of time you have to pay it back — is 20 years on a single-family or multifamily structure; 15 years on a manufactured home on a foundation; and 12 years for a manufactured house without a foundation

  • The maximum loan amount is $25,000 on a single-family home; $12,000 per unit on a multifamily structure, up to a total of $60,000; $25,090 for a manufactured home on a foundation; and $7,500 for a manufactured home without a foundation

  • An FHA-insured product known as the 203(k) loan is often used to fund major repairs and renovations

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